Generosity During Extraordinary Times: A Look at Donor Advised Funds
2020 has had a rough start; COVID-19 has impacted our families, friends and communities, and the total span of the economic fallout is yet to be seen. Unfortunately, among those hit hardest is the nonprofit sector. We’ve seen charity events of all types cancelled or moved to virtual platforms and connecting with donors is challenging as well. These are unparalleled times so providing support in any way we can is imperative.
A little over a month ago, Terry Mazany, senior vice president for philanthropy at the Community Foundation for Greater Atlanta, published an opinion piece in the Chronicles of Philanthropy [1], indicating that Donor-Advised Funds “serve society well” during times such as these. He stated, “During times of fiscal stress, donor-advised funds play a critical role as the philanthropic capital reserve in communities across the United States.” Now, more than a month later, we reflect on our own DAFs to confirm his opinion that DAFs really do provide support during exceptional circumstances.
United Charitable, a 501(c)(3) nonprofit offering Donor Advised Funds and Fiscally Sponsored Programs is among those extending a unique and efficient way to give, the DAF. Donor Advised Funds are charitable vehicles that alleviate the heavy administrative burden, complex IRS oversight, and high cost of a private foundation. They offer an organized and efficient platform to start building lasting charitable impact. As funds donated into a DAF are tax-deductible in the year that they are given, donors have the gift of time to decide when and to whom they will recommend grants.
Matteo Sabattini, a United Charitable board member, agrees that “These are unprecedented times. Life has truly turned upside down. Social distancing shall not prevent community support and social care. Those of us fortunate enough to have the means to give, can do so in many ways according to our own circumstances. DAFs allow focusing on the causes we care about the most, make a positive impact in the community in these challenging times, and build a long-standing legacy.”
Here’s why Donor Advised Funds are in a unique position to help right now!
Donor Advised Funds are funded the moment they are established.
Establishing a Donor Advised Fund is a quick and seamless process. It offers you a charitable vehicle that provides safe and effective giving opportunities that can last for generations. By its nature, funds donated into the account are already allotted to charity. This means those who have a Donor Advised Fund today are in the unique position to donate freely without concern of financial circumstances. All funds allocated into a DAF are used to support 501(c)(3) organizations fulfill their missions. The money is already there, a donor only needs to decide when and where they want to grant. What better time than now!
There are numerous existing DAFs that can start donating immediately! Over the past decade, thousands of DAFs have been created. The National Philanthropic Trust’s 2019 DAF Report indicates that as of 2018 there were well over 700,000 Donor Advised Fund accounts in the United States. [2] These accounts are funded through a variety of assets and receive tax relief the moment that they are donated. These funds are securely held by the sponsoring organization, enabling donors to feel assured that they have the means to contribute, especially in a time of need such as this.
The Global Reach of a Donor Advised Fund
Donor Advised Funds are established with sponsoring organizations across the nation. However, once a DAF is created, it has the ability to recommend grants to qualifying organizations all over the world. Donors can decide to support their local charities and even national organizations. What is unique though, is that a DAF can reach out globally. Through a donor’s online DAF management platform, they can recommend grants to organizations in countries around the world such as Mexico, Philippines, and Italy.
Security in Your Donations
We’ve all read or heard the horror stories about charitable scams and mismanagement of donations, especially in times of an emergency. DAF’s provide a level of security that give donors peace of mind, enabling them the freedom to concentrate on their cause while the sponsoring organization takes on the accountability. Most sponsoring organizations vet every grant request made by a donor, before sending the funds out, ensuring the receiving charitable organization is in good standing with the IRS, and that they comply with all regulatory requisites. DAF online platforms offer unparalleled, one-stop record keeping so donors can stay on top of their strategy in real time. Sponsoring organizations also handle expenditure responsibility, over a certain dollar amount, making sure your donation is being used in the way you intended.
In summary, DAFs are charitable dollars just waiting to be distributed. They are put through rigorous security measures and have the power to help globally. As of today, a full month after Terry Mazany’s article, we are honored to share that we’ve seen the generosity firsthand. We’ve sent out grants from Donor Advised Funds to extraordinary charities such as Centro Para El Desarrollo Del Potencial Humana A.C. in Mexico, Doctors Without Borders USA, and locally to the Northern Virginia Human Trafficking Initiative, all doing their part to help during this pandemic.
As the common thread holds, we are stronger together!
And, as we say here at United Charitable, these are times for perseverance & positivity!
To learn more about Donor Advised Funds or Fiscally Sponsored Programs, visit us at www.unitedcharitable.org
[1] Terry Mazany, www.philanthropy.com/article/The-Coronavirus-Outbreak-Could/248247
[2] 2019 Donor Advised Fund Report, National Philanthropic Trust https://www.nptrust.org/reports/daf-report/