Devex Newswire: Philanthropies’ fears creep closer to reality

Behemoth legislation that would hit large philanthropic foundations in the United States inched one step closer to fruition — a predictable development given that Republicans control the committee approving it. But the next steps are far from predictable — as are the ways in which foundations will try to fight back.

Also in today’s edition: A major departure at the World Health Organization and painful cuts at the Danish Refugee Agency.

Where there’s a will, there’s a way(s and means)

While U.S. President Donald Trump’s “big, beautiful” tax bill is still a far cry from becoming reality, it passed a key committee in the House of Representatives — the Ways and Means Committee — about an hour after yesterday’s edition of our Newswire went out.

In that edition, we wrote about the implications of the legislation on philanthropic foundations. Those implications bear repeating here because of just how far-reaching and serious they are.

If you recall, the sweeping tax bill — and by sweeping I mean nearly $4 trillion in tax cuts — would institute a tiered taxation system for foundations to help pay for those tax cuts.

Specifically, as my colleague Elissa Miolene details, it would only maintain the current tax rate on investment income — 1.39% — on foundations with assets below $50 million. Those with assets between $50 million and $250 million would pay 2.78%, while those with assets between $250 million and $5 billion would pay 5%. And the largest foundations, those with assets above $5 billion — think Gates Foundation, Bloomberg Philanthropies — would be taxed at 10%.

Again, that’s a rate jump to 10% from 1.39% — a huge spike for the wealthiest foundations that could put a severe dent in their giving.

Philanthropy Roundtable, a nonprofit that advises conservative philanthropists, says the proposal is “robbing charity to fund government.”

In addition to the tax hikes, the bill proposes slapping a 5% tax on remittances from non-U.S. citizens — which could threaten a key source of funding outside of foreign aid for countries in the global south. It would also allow the government to strip the tax-exempt status of organizations it says support terrorism, which critics say could be used politically to allow the administration to target nonprofits it doesn’t like.

All this comes at a time when philanthropy is being looked to as a salvation for the foreign aid funding that Trump has decimated. For now, many organizations are urging supporters to speak up.

“Congress is moving fast,” writes Paul Daugherty, the head of Exponent Philanthropy, in an alert to the network’s members. “Your voice is urgently needed.”

Read: Trump's 'big, beautiful bill' clears key committee, hurting foundations

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Look WHO’s out

After weeks of anticipation, World Health Organization Director-General Tedros Adhanom Ghebreyesus announced his new leadership team — and it’s going to be missing a few familiar faces.

Tedros is letting go of most of his current assistant directors-general, along with his deputy, Dr. Mike Ryan.

Dr. Chikwe Ihekweazu will replace Ryan as executive director of the health emergencies program, my colleague Jenny Lei Ravelo writes. Meanwhile, Dr. Jeremy Farrar will take over as assistant director-general for health promotion and disease prevention and control, among other changes, which take effect June 16.

“This was, as you can imagine, an extremely difficult and painful decision for me, as it is for every manager in our organization who is having to decide who stays, and who goes,” Tedros says.

But he adds that he’s “confident” the new team “is best positioned to now guide WHO as we face the challenges of the coming years.”

Read: Tedros reveals new WHO leadership without deputy Mike Ryan

ICYMI: As WHO lays off staff, why is transparency more crucial than ever? (Pro)

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Easier said than Dane

The Danish Refugee Council is also making painful decisions after the abrupt loss of U.S. funding, which made up 20% of its budget. “Losing our second-largest funding partner will mean a reduced global footprint,” says Secretary-General Charlotte Slente.

That reduced footprint translates into the elimination of over 650 staff roles and the shuttering of operations in six countries, meaning the organization will reach nearly half a million fewer displaced people.

Funding freeze fallout: Tracking furloughs, layoffs, and cuts

Parting ‘gift’

Another agency in crisis mode is the U.S.Millennium Challenge Corporation, which promotes economic development and good governance. As my colleague Adva Saldinger scooped, the Department of Government Efficiency, or DOGE, has told MCC that it must rapidly wind down all operations and significantly cut staffing.

Now, MCC’s acting CEO is heading for the exits, according to several sources.

“As of this afternoon, I have stepped down from my temporary service as MCC’s Acting CEO and I will proceed to take deferred resignation,” Gina Spiro wrote in an email to staff on Tuesday that was seen by Devex. She called her time at MCC a “gift” and that it was an honor to work with colleagues at MCC since 2006.

While efforts are underway to preserve the agency and rumors are swirling about potential proposals before the board, it is unclear when the board might consider MCC’s fate and whether Secretary of State Marco Rubio, who chairs the board, will weigh in and keep the agency.

Read: Millennium Challenge Corporation's acting CEO resigns

ICYMI: MCC shutdown would risk global trust, cede ground to China, experts warn

Burgers can’t be choosers

That burger van is a reference to the United Nations — “because it’s pretty much all that is going to be left,” Gowan says. “Everyone is going to be campaigning on how much they can shrink the U.N. and how tiny they can make it.”

Gowan was joined by Natalie Samarasinghe, the former CEO of the United Nations Association-UK, during a recent Devex Pro briefing on the future of the U.N. moderated by my colleague Colum Lynch.

That future is much murkier in the second Trump administration than it was during Trump 1.0, when the U.S. president granted U.N. Secretary-General António Guterres not one, but two White House visits. This time, he can’t even get Trump on the phone, Gowan says.

The change reflects the rapidly diminishing standing of the United Nations in the eyes of a White House that sees little value in the world body, Colum writes. U.N. officials, meanwhile, are straining to interpret a series of White House executive orders that have only fueled confusion over what exactly the U.S. wants out of the U.N.

“U.S. positioning has been completely incoherent,” Gowan says. “There are fairly obvious contradictions between the U.S. saying there should be no funding for peacekeeping, but it is essential that we keep peacekeepers in South Sudan.”

For Samarasinghe, Washington’s overwhelming focus on the bottom line has resulted in the pursuit of savings over solutions to the world’s most pressing problems.

“I don’t think anyone would disagree that change needs to happen,” she says. “But at the moment the focus is really being driven through the lens of cuts, as opposed to what types of change we need. It’s a question of form over function.”

Watch: Trump and the future of the UN (Pro)

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In other news

The U.S. Department of Agriculture has canceled grants under the Food for Progress program, which helps lower-income countries strengthen their agricultural sectors. [Reuters]

The Gaza Humanitarian Foundation, the U.S.-backed entity that will deliver aid in Gaza, will begin its operations before the end of May. [AP]

Civil society groups are urging the U.K. to avoid the “neocolonial exploitation” of low-income countries in its pursuit of critical minerals needed for green transition. [The Guardian]

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