Flow or Freeze: The Stakes of Regulating Generosity
(Previously published on Medium)
“Master, just now when I was in the market-place I was jostled by a woman in the crowd and when I turned I saw it was Death that jostled me.”
With three of the defining pressures of our era now unmistakably in view— geopolitical fissures, a marked retreat from globalization, and the rapid advancement of artificial intelligence — an old parable comes to mind. In Jorge Luis Borges’ Extraordinary Tales, Borges and Adolfo Boy Casares include a brief retelling, borrowed from W. Somerset Maugham, of an ancient Mesopotamian parable. It reads less like allegory now.
I reprint it here in full:
DEATH SPEAKS:
There was a merchant in Baghdad who sent his servant to market to buy provisions and in a little while the servant came back, white and trembling, and said, Master, just now when I was in the market-place I was jostled by a woman in the crowd and when I turned I saw it was Death that jostled me. She looked at me and made a threatening gesture; now, lend me your horse, and I will ride away from this city and avoid my fate. I will go to Samarra and there Death will not find me. The merchant lent him his horse, and the servant mounted it, and he dug his spurs in its flanks and as fast as the horse could gallop he went. Then the merchant went down to the market-place and he saw me standing in the crowd and he came to me and said, Why did you make a threatening gesture to my servant when you saw him this morning? That was not a threatening gesture, I said, it was only a start of surprise. I was astonished to see him in Baghdad, for I had an appointment with him tonight in Samarra.
Over the past decade, regulatory frameworks around philanthropic capital have grown more intricate. What began as a push for transparency has evolved into a dense architecture of reporting requirements, restrictions on incidental benefits, and a broader reframing of philanthropy as a corrective to wealth, rather than a tool for systemic contribution. In tightening control, we may have limited the very flexibility that makes this capital structurally useful.
The scrutiny did not emerge in a vacuum. It coincided with a broader reappraisal of capital systems during a period marked by wealth inequality, post-financial crisis dysfunction, and accelerating climate instability. Capital discretion, particularly around private wealth, was met with skepticism. In response, policy frameworks began to narrow. A redesigned Form 990 drilled into nonprofit governance. IRS Notice 2017‑73 narrowed the definition of permissible public benefit. Now, the Accelerating Charitable Efforts (ACE) Act proposes to standardize donor-advised fund payouts and limit advisory control. Together, these measures reflect an architecture built to constrain discretionary capital rather than enable its strategic use.
As markets hesitate and policy lags behind technological inflection, the ability to act across time horizons narrows. Philanthropic capital, once defined by its discretion, now operates under a growing set of constraints. In systems terms, the risk is rigidity, not disorder. In trying to contain risk, we may be engineering the outcome we set out to avoid.
Philanthropy was not built to mirror markets or mimic government. At its best, it functioned as a flexible, adaptive layer; it was capable of moving resources where institutional actors could not. Historically, this flexibility was preserved by design. Industrialists like Carnegie and Rockefeller funded education, research, and infrastructure not by mandate, but by initiative. The absence of regulatory constraint was not an oversight; it was an enabling condition.
Scrutiny has its role. Accountability, in principle, is a necessary constraint. But we are not short on reporting obligations or payout statistics. We are not short on watchdogs, on hearings, or on regulatory enforcement. What’s missing is not governance, but ambition. We need actors willing to place long-term bets and donors who see philanthropic capital not only as relief, but as architecture. Systems won’t shift without people prepared to fund what doesn’t yet have consensus. If we restrict philanthropy to reactive functions, we risk eliminating one of the few levers still capable of operating on extended time horizons. That would be a structural loss, not a political one.
Niels Bohr once noted that the “opposite of a profound truth may well be another profound truth.” Bohr had it right; two opposing truths can both be valid. Accountability matters. So does discretion. But in seeking to optimize for one, we risk neutralizing the other. Non-emergency philanthropic capital must retain the flexibility to operate in uncertainty. It is one of the few resource types still capable of underwriting the future. We need charitable dollars to have a vested interest in our infrastructural future. Here are a few reasons why:
AI will displace workers at historic scale. Goldman Sachs estimates that 300 million workers worldwide could be displaced by AI by 2030.¹ McKinsey is less optimistic. They set their estimate at 400–800 million workers who may need to move into new roles.² Depending on when we reach AGI, and ASI, those estimates may be conservative. Some stewards of artificial intelligence are calling for universal basic income (UBI).
Pandemic after‑shocks have reversed poverty gains. The World Bankcalculated that COVID‑19 pushed 97 million people into extreme poverty in 2020.³ Conservative estimates prior to geopolitical tensions showed that food‑prices and debt pressures could widen that figure to roughly 150 million by the end of this year.⁴
Deglobalization is narrowing fiscal space. The Budget Lab at Yale estimates that the 2025 tariff slate will lift the average effective U.S. tariff rate to 22.5 percent, the highest since 1909; consumer prices will rise 2.3 percent, removing $3,800 from the average household, and cost the United States $160 billion a year.⁵
Health R&D pipelines are stalling. NIH’s FY 2025 plan cuts total discretionary biomedical research by $2.1 billion, including a $310 million cut to the National Cancer Institute and a 14 percent haircut to the Rapid Acceleration of Diagnostics(RADx) program. Internal agency memos note ≈130 phase‑three trials now deferred across oncology, HIV vaccines, and neurodegenerative therapies, while overhead allowances on new grants have been halved, prompting lab lay‑offs at major academic centers.⁶
Clean‑energy capital misses the global South. The IEA counts $2.2 trillion in global clean‑energy investment for 2025, with emerging economies attracting less than one‑fifth of that flow, leaving a $300 billion annual gap for grids, storage, and adaptation.⁷ The clean energy transfer coinciding with the rise of Artificial Intelligence threatens the development trajectory of emerging economies.
Housing supply cannot meet demand. Freddie Mac estimates a 3.7 million‑unit national housing deficit (Q3 2024);⁸ NLIHC reports a 7.1 million‑unit gap in rentals affordable to the lowest‑income households. There are only 35 homes for every 100 families that need them.⁹
Consider the case of artificial intelligence and its projected impact on labor markets. Some in the AI community have proposed universal basic income (UBI) as a necessary downstream mechanism. It’s a provocative idea — particularly as workforce displacement accelerates. Conservative projections estimate job displacement in the U.S. at 14 million, with global figures several orders higher. Even as a theoretical construct, UBI raises essential questions: What system would fund it? How would capital flow from concentrated AI gains to widespread economic stability? And what mechanisms could deliver that transition without eroding the foundations of market-driven innovation?
The potential economic gains from AI, while often touted as outsized, will likely accrue to the wealthiest capital holders within foundational model providers, infrastructure operators, and entrenched platforms. While conceptually aligned with offsetting displacement, the execution is fraught. The design tensions are significant: national taxation frameworks against global firms, innovation incentives against wealth transfer, and near-term revenue capture against long-term system resilience. Redistribution alone is unlikely to resolve the structural imbalances.
An alternative approach is to reconsider the role of philanthropic capital (including donor-advised funds) as a structural enabler of long-horizon systems. Rather than treating these assets as passive reserves, they could be deployed into foundational infrastructure aligned with emerging technologies: AI compute, autonomous transport, advanced health systems. These investments would not be purely extractive. Returns generated would be cycled into lower-yield applications (re-skilling initiatives, labor transition platforms, or pilot programs for income stabilization in regions most affected by automation). Instead of waiting to repair what AI displaces, philanthropy could help build what comes next.
Taken at face value, the figures in the list of issues outline a risk surface that is moving faster than conventional capital or public budgeting cycles can adjust. There are vulnerabilities in our systems across broad swathes of complex issues. In that vein, discretionary philanthropic capital should be encouraged to perform functions of underwriting early experiments, absorbing pre-commercial risk, and accelerating momentum in ventures like that of infrastructure or research. In particular, donor-advised funds should not be tethered to private foundation rules. They are wholly complex and serve a distinct purpose. Heavy regulation is not only antithetical to their intended function, but it also fails to achieve its goal; rather than directing more capital into the real economy, it risks chilling new contributions, triggering premature grant-making, and undermining one of the most accessible and adaptable forms of philanthropic capital available today.
As the servant believed he could avoid his fate by outrunning it, regulatory frameworks often assume that tighter constraints will deliver philanthropic capital to its ideal destination. But constraint alone cannot guarantee alignment. In attempting to control flow, we risk interrupting it altogether. It is worth remembering: philanthropy is voluntary. That it exists at scale reflects a complex social instinct that is not easily replicated by policy. Donor-advised funds, in particular, offer a unique advantage. Their flexibility allows them to engage with long-horizon ventures that sit outside the mandates of markets or states. Over-regulating this form of capital may erode one of the last available tools for early intervention and system-level response. The danger is not theoretical. It lies in the architecture we choose and whether or not that architecture allows essential systems to function. What we preserve now determines what remains possible later.
Further:
¹ Hatzius, Jan et al. “The Potentially Large Effects of Artificial Intelligence on Economic Growth.” Goldman Sachs Economic Research, March 26, 2023.
² Manyika, James et al. “Jobs Lost, Jobs Gained: Workforce Transitions in a Time of Automation.” McKinsey Global Institute, December 2017.
³ Lakner, Christoph et al. “Updated Estimates of the Impact of COVID-19 on Global Poverty: Turning the Corner on the Pandemic in 2021?” World Bank Blogs, June 24, 2021.
⁴ World Bank. “COVID-19 to Add as Many as 150 Million Extreme Poor by 2021.”Press Release, October 7, 2020.
⁵ Kroszner, Randall et al. “Where We Stand: Fiscal, Economic, and Distributional Effects of All U.S. Tariffs Enacted Through April 2025.” Budget Lab, Yale School of Management, April 2025.
⁶ Brennan, Zachary. “Trump Plans $18B NIH Budget Cut, Wants 27 Centers Consolidated to 5.” Fierce Biotech, May 23, 2024.
⁷ International Energy Agency (IEA). “Financing Clean Energy Transitions in Emerging and Developing Economies.”June 2021.
⁸ Freddie Mac. “US Economy Remains Resilient With Strong Q3 Growth.”Research Forecast, November 26, 2024.
⁹ National Low Income Housing Coalition. “The Gap: A Shortage of Affordable Homes 2024.” March 14, 2024.