Direct-To-Consumer Philanthropy: What Invest America (Trump Accounts) Means For The Sector (news)

This week on the Nonprofit News Feed, of course, brought to you by Whole Whale, B Corp, digital agency focused on analytics advertising and AI capacity. My name is George Weiner. I’m the chief whaler and huge nonprofit geek who loves tracking the news, and I’d probably be doing this even if you weren’t listening. And I have Nick Azulay, digital strategist at Whole Whale. Hey, Nick. How’s it going? Nick Azulay It’s going great, George. How are you? George Weiner Doing all right. I feel like all of our predictions about the Super Bowl came true. I wish some of my bets were a bit more accurate, given you definitely called the big news with Bad Bunny putting out a lot of great content. I wanted to take the bet that he would not say a single word in English. I was very, very close. Nick Azulay You were very close. I think we got a God bless America, and then every other country in the Americas. George Weiner Yeah, then it was you wanted to make sure we all understood that one. But hilarious, hearing the after recap by NPR and folks talking about the 135 million folks that came in there, and how actually this is focusing on the future the NFL is looking to bring in those audiences that are going to make sure that the brand sustains, rather than clinging to the old. And in the NPR news coverage of the Super Bowl, they were at the very end, and by the way, the Seahawks won. And I was like, chef’s kiss. Perfect. By the way, there was a football match. There’s a football match that was over five minutes in. Anyway, George, we want to talk we want to pivot real briefly into our main story for the day. And this is an interesting one, George, we actually wanted to talk about something that was promoted at the Super Bowl. It was commercial. And we thought it was actually worth diving into because of its ramifications for philanthropy. So George, we want to talk about the Invest America accounts, also known as and this will be the only time I say it, Trump accounts. What are these accounts? These accounts are a federally backed tax advantage investment account for every US child under 18 who wants one. What is the benefit of these accounts? Well, George, the Treasury Department is going to see each of these accounts with a $1,000 deposit for newborns starting in 2025. Accounts will unlock on July 5, 2026. George, for the investment among us, you can basically think of this as a retirement account for childhood, right? You invest in it as a kid, it matures, you can’t touch it. Once you turn 18, it’s yours. Here’s where it gets interesting, George. The Dell Foundation made a $6.25 billion commitment, the largest single philanthropic pledge tied to the program, depositing $250 into the accounts of 25 million children aged 10 and under. The narrative we want to pull out of this, George, is that we’re now entering a realm, we have a vehicle, if you will, in which traditional means of providing support to disadvantaged families and children, which had previously been in many ways, the sole responsibility of local on the ground nonprofits is now being leveraged by philanthropy at this direct-to-consumer philanthropic model in which philanthropic foundations, corporations, employers, George, maybe even you want to throw something into an account for the kids of our employees, right? Yeah, limit up to $2,500 a year, I believe. $2,500, there you go. George, this is a kind of interesting and exciting development, I think, for youth, particularly investing in accounts. George, there’s ways to invest for your kids already, right? There’s ways to invest in your children’s future without these accounts. But I think the logic is that for underprivileged children or children who may be less financially literate, et cetera, there is now a vehicle in which families can unlock these accounts and start saving based on compounding gains over 18 years, or as long as up to 18 years. So George, there’s a lot to pull out here. What are you thinking? At a very high level, I think it’s amazing this made it through in this administration and is testament to some very, very smart dealmakers behind the scenes, like Brad Gerstner, the Dells, that were trying to architect this and very, frankly, cleverly, let Trump put his name on it. And if you want something done, just let him put his name on it. This may go down as the most lasting positive impact that this administration had in its entirety, full stop, which I think is important to note that as much as you want to hate absolutely everything at times, I think there are components of this that are going to last far, far into the future. I think this is also a toe in the water of UBI, universal basic income at a national scale, distribution of money to people across the board. Now, yes, it’s specifically to children. There are secondary incentives involved here, which are around birth rates, which become more and more important, I think, as we go along and we watch birth rates decline in major developed countries, the cost of living, but also the fact that roughly half of Americans don’t participate in the asset, the capital markets of owning stocks, owning a share of these major companies that are growing into the trillions of dollars. And by doing that, you better wed, I think, the rising generation to the overall rising ships of the economy rather than watching it as though it were a car speeding by on the highway while you stand on the side at the bus stop. Yeah, George, I think that’s a good point. And just kind of mathematically here, I was just plugging this quickly into AI, what happens to $1,000 after 18 years? Assuming a 10.5% rate of return, you’re looking at $6,144. Assuming a 6% return, you’re looking at just shy of $3,000. But of course, George, you also now have this account. So if you start adding $5 to this amount every month or something, obviously, this accrues. And you can go to the Invest America marketplace, and this very lovely marketing is all over. George, we want to do a little pro-con here. You want me to say the cons or do you have a couple of pros? Hold on. Before we get into it, I just want to make an extra note here that is very, very important to the nonprofit sector. Two notes. One, this is opening the avenue for a new set of charitable rails, charitable rails, for getting money to those families at the greatest risk. The Dell Foundation didn’t just sort of spray and pray that money. I don’t know if we really mapped that properly in what you talked about. They’re actually targeting low income zip codes. So in this new setup, you’re actually able to say, actually, we want to fund children that are in Title I schools, Title I school districts, certain areas for this state. You can actually now fundraise, deploy funds, and distribute them toward very specific communities in ways that you can see actually landing in their accounts protected to those children, which is very, very exciting. It’s unique. We’ll go through the pro and con. I think that’s it. So new charitable rails for philanthropic support akin to give directly. The GoFundMe is like, oh, no, we’re going to get cut out of actually helping the direct individuals. This is a direct payment rails to folks in however you want to slice it when you go through their system at Invest America. So that’s like a big new thing. And the other that we’ll get into probably in our pro con, but just to note is it’s opt in. And so the opportunity for nonprofits, just to front run this, the opportunity for nonprofits is also making sure the communities that would overlook this, that would forget this are aware of it. And similar to, frankly, the fact that there are many people that are eligible, for example, for food stamps for government assistance, don’t apply because of the reporting requirements. And the registration requirements are too cumbersome and confusing. A mountain of paperwork separates them from government services and support that they are that they are owed and do. So I think there is a huge opportunity for nonprofits to be working in communities to register families for this, because it’s also eligibility, not just for newborns. I think I cannot find the exact amount, but they say that under 18 year olds, it’s not necessarily $1,000 if you’re sitting there with an eight year old, but there is some money somewhere being distributed. It is not zero. Yeah, George. No, I agree. So what should we say? Should I dive into some cons? Cons. There must be a bad thing here. What are the bad things? You’re going to take, you’re going to take the skeptic. I’m going to take the pro side here. Yes, I am going to take the skeptical side just for educational purposes. Something I want to note, George, is I wonder whether some policymakers might think there is an opportunity cost here in terms of deploying political capital towards these accounts, which fund and in theory, address some of the inequities in child poverty rates in the country. The skeptic might say, why don’t we more urgently tackle things like reinstituting the child poverty tax credit, right? Which like effectually halved childhood poverty in the United States for a couple of years back during the pandemic. That might be one critique. George, what would you say to the critics who might raise that as a concern? You know, this touches on whataboutism, the either or argument certainly plays, frankly, because it was coming up in the same series of bills where obviously things are being cut in favor of other things. I think this is, you know, apples and submarines. Very clearly, like money, you know, money now, that type of support child tax credits is a completely different ecosystem. And I don’t think you were going to get any advances in that. I mean, see health care for one that got ruthlessly cut, and that’s going to be rolled out in 2026. The cuts were coming for those social services and social supports. As sure as the sun was rising in the morning, this actually is the bright spot that somehow was leveraged into that because the alternative wasn’t you were getting child tax credits, which are the smartest freaking thing we should be doing if we care about helping kids today. It wasn’t. That is fair, George. Here’s another con for you. Can’t argue with that. I think this one’s actually a little stronger. Rather, this one is that the many children are going to get left out. And this speaks to what you were saying about the space for nonprofits and opportunity for nonprofits to help folks access this. But George, these accounts are opt in, not opt out. And opt in means you need to have the knowledge they exist, the means to sign up for them. I’m sure there’s also as well, all sorts of documentation that goes with it. If you’ve ever filled out like the FAFSA, right, you know that this stuff can be pretty onerous. And that inherently creates barriers. Not to mention, particularly low income families, right, may be very skeptical of something that’s called a Trump account when they feel victimized by the government for a whole host of a dozen reasons. So that’s just something to kind of call out. Something else I want to call out, George, is this is not really, this is not progressive necessarily, right? This is kind of, even though like philanthropic donors can make it progressive in a way by targeting their donations to specific zip codes, which has all sorts of, I think, interesting and beneficial, but also maybe detrimental second order effects. Everybody gets $1,000, right? If you meet the requirements, right? There’s no income requirements here, which means that wealthy folks are also accessing these accounts. Again, is that a bad thing? No, every child deserves to have a good future, right? But it does kind of call into the question, okay, is there ways to better allocate the funds coming from the Department of Treasury? So, George, those are my two critiques there. One, that it’s opt-in, not opt-out, and it’s not progressive. And I wonder what the proponent of these accounts might respond. Two excellent points. One, this is probably by design, right, where you have to have a social security number for your child. You also have to file the IRS Form 4547 to elect and opt-in to get this money. Yes, there’s going to be an online portal this summer. Who knows how that will be set up and what barriers there will be in the way. And that is the opportunity for nonprofits in your community. You have to be out there on the side of being like, I will fill this form out for you. I spent a number of summers, a number of semesters, I’ll say, in Philadelphia, registering people for food stamps. I think I registered, by the end, 30 to 40 families. And it took time. It was hard. It was like I had to go through and map that out. And that is a ground game. That is the opportunity. That is what I think we’re looking at. And yeah, it is a bit onerous. The other point is incredibly well taken. I think it is absolutely ridiculous that families below the poverty line are getting, for their children, the same amount that those that are deciding which vacation home they’re going to go to this spring break. That doesn’t make any sense at all. What’s more, yes, the advantages of having, frankly, employers that will be able to contribute to this, to have excess money that you’ll be able to contribute to this, is a clear advantage as well that will compound that. But $1,000 is more than $0. And what’s more, these are the charity rails now in place. And the Dell Foundation has done an amazing job of deploying six plus billion dollars toward those zip codes, showing how philanthropies can use this to, frankly, make up for where the government made the mistake, I think, of not making it progressive by any means. It wouldn’t have been hard, I would say. Yeah, George, one last point, and then we’ll move on. I am super intrigued by the granularity of philanthropic foundations or grantmaking organizations to target funds to these accounts, almost like we’d target digital ads to people. What kind of parameters do they have to be like, okay, they can do it by zip code? That’s pretty specific. There’s a lot of zip codes in America. Right? It’s great when your intentions are the best, right? But that also means that when you target something, it means you’re also not targeting other people. And that allows, there’s a lot of assumptions baked into XYZ zip code is more or less rich than another zip code. And that I think introduces a whole host of other kind of downstream consequences when we’re getting kind of that level granularity in philanthropic giving. So anyway, something to think about and munch on. I don’t have a good response. And it’s a great point. When you target someone, there’s somebody outside of that target. And there’s bias inherent in that choice and that structure. But I am still shocked at the ability to target in the ways that it seems like you will be able to for communities that you deem are in the most need based on your estimate of what that need assessment is. There’s one thing that I’m surprised you didn’t bring up is that you actually don’t have real control over the investment component of this. These are like US equities essentially, or a bundle of US stuff that it’s invested in. And it’s the assumption you said 10%, that would be delightful. If you were looking at the markets as of, I don’t know, today, it fluctuates quite a bit. Anything can happen. And so your sort of fate is in the hands of the US market, but that is not a feature. It’s not a bug. It’s a feature of what they want folks being invested in America. And in another way, this actually cycles funds in a way that simply just makes its way back to the market as opposed to helping the need of today. What use is $30,000 when you’re 18, if you grew up without parental support, enough food, proper education, what do you think happens when you dump $30,000 on that person at a point where they weren’t ready for it? There’s a reason the fire department doesn’t take all the money that we, in our taxes, send them and dump that money on a fire. They invest in fire equipment, in water, water network, trucks, equipment. They aren’t dumping money on a bonfire. That does not work. So I want to put that asterisk out there as excited as I am. I’d be more excited if we were also looking at child tax credits, but again, that’s apples and submarines. And I know they’re being thrown together, but they’re different. I love this discussion. I’m excited to see how it sort of matures. We’re going to cover this again. And again, I think definitely in the summer, I’m going to pay attention to that form, how it’s rolling out and positive. I think we needed some positive and this is certainly something that I’m watching. All righty. We have waxed poetic for quite a bit here. Anything else you want to cover? I got a couple more and we can do these both very quickly, George. One is just kind of an interesting one. This comes from the Associated Press. It is that a former USAID division or unit has relaunched as an independent nonprofit called the DIV Fund. They’re backed by $48 million from two private donors. And it plans to disperse about $25 million a year, roughly half of its former government budget. The idea here is that the people working in this particular USAID unit have reconvened independently to continue some of the projects that were actually lost. So this is kind of cool, sad, morbid. Obviously, $48 million is not the billions of dollars that USAID was managing a year. But it’s interesting to see folks turning to this model to kind of close out the remnants of USAID. Yeah. I mean, the private sector allocating toward foundations, nonprofits, picking up the slack, exactly what we have seen. And this is just a, I’d say, in the branded theme, maybe some way of trying to not immediately rug pull people that were dependent on services. For sure. For sure. And George, our other one in the newsletter comes from the Nyman Lab or Nyman Lab. And kind of an interesting one that ICE operations and local hustles and protests and such have actually caused a spike in traffic and attention to nonprofit news outlets. This is kind of cool, right? It kind of shows that in hyper-local but hyper-tense environments, there is still a reliance on local reporting. And it seems that particular papers and news outlets have received jumps in attention as they fill that gap in local reporting. George, of course, the broader news sector has been decimated. Even just last week, we saw 300 journalists laid off at the Washington Post, which is just a huge blow to news in general. But there are these smaller outlets, both local, such as papers focused on Minnesota’s immigrant community, local kind of immigrant-oriented papers in New York and elsewhere, and also larger national nonprofits like ProPublica and the Salt Lake Tribune, kind of holding study there. So just kind of interesting to see that in times of need, the importance of local journalism, many of which are oriented in a nonprofit model, are still really valuable. Yeah. The hope is that some sort of financial compensation model is created for the AIs that ruthlessly scrape this information. The reason why traffic is going there is because there’s firsthand on-the-street reporting that is being vetted and produced and pushed out. And that is something that ChatGPT cannot do. It doesn’t even know what day it is until you literally code it and tell it, because it is a snapshot in time, it is a language model, and it’s only the humans doing the work that pull that information in, vet it, and share it. And I’m hoping and waiting for larger revenue share opportunities for these networks. Yeah. George, where’s Mackenzie Scott on Uneter? Can we resurrect it? Washington Post, second try. Damn. All right. Here’s a bad joke for you, George. Why was the Michael and Susan Dell Foundation so nervous about its investments? I don’t know. They came at a particularly Dell-a-kit moment for the wider philanthropic community. Wait, I told you it was bad. Yeah, you did. You warned me, and it wasn’t enough of a warning. And so I hold you at fault for this one. Thanks, Nick. Thanks.