Trends

Don’t tie the hands of DAFs, the best aid option in the COVID economy

In the first weeks of the coronavirus pandemic’s assault on our nation, donors who hold donor-advised funds have been stepping up in a major way to help support those in need.

Trends indicate that we are likely to see billions in additional funds moving to nonprofits from DAFs this year.

But even in the face of studies that show DAFs provide a stable lifeline for nonprofits during times of economic trouble – and news that DAF donors have quickly responded to a disaster that will require years of sustained investment – the critics remain out in full force.

The critics are right that DAF sponsors should be encouraging their donors to give more in the face of this crisis. But in suggesting that nothing short of distributing everything in the funds will suffice, some nonprofit observers ignore crucial facts about how DAFs work and the long-term role they play.

The simple truth is that DAFs are helping to expand the pie for nonprofits, not shrink it.

Indeed, these funds are routinely labeled “shams” and “tax shelters” where the wealthy stash money for themselves at the expense of charities that will never see the benefit of their largesse. These falsehoods are being spun and recycled in media coverage and in commentary, and they could lead to rules that would hurt nonprofits of all sizes.

The simple truth is that DAFs are helping to expand the pie for nonprofits, not shrink it. They make it easy for donors to give, and without them, much less money would make its way to the homeless shelters, soup kitchens, and environmental charities that are presented as victims in most commentary about DAFs. Nonprofits received more than $23 billion in grants from DAFs in 2018 – and that figure has shot up for the better part of the last decade.

Read the full story at The Chronicle of Philanthropy.

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