The Rise of the Monster DAFs
Rising like monsters from the deep, donor-advised funds (DAFs) have finally caught up with foundations as the wealthy donor’s charitable warehousing vehicle of choice — and are poised to eclipse them.
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Over the last two years of the pandemic, several coalitions have pressed for modest reforms to the laws governing charitable giving. These have included the Emergency Charity Stimulus to require temporary increases in grant payout rates and the Accelerating Charitable Efforts Act (ACE Act) to increase grant flow and reforms to donor-advised funds (DAFs). A new Ipsos poll shows broad public support for reforms such as these.
By very large margins, Americans do not want the U.S. tax code subsidizing wealthy donors to create perpetual private foundations and warehouse wealth in DAFs. And a broad, bipartisan majority wants donors who are receiving preferable tax treatment for their charitable contributions to move funds quickly to active charities on the ground.
Those are the findings of a new survey of over 1,000 adults by Ipsos and the Charity Reform Initiative at the Institute for Policy Studies conducted in June 2022.
For a summary of polling results, see HERE.
Specifically, the new survey reveals:
More generally speaking, the survey revealed that broader public awareness about the non-profit sector, including foundations and DAFs, remains low and unchanged from a previous 2020 Ipsos benchmark poll:
The Ipsos survey also revealed the better the public understands these issues, the more intensely they support reforms that ensure charitable tax benefits to donors also provide benefits to actual charities. Specifically, respondents across the political spectrum expressed a strong discomfort with taxpayer subsidies allowing donors to set up perpetual foundations, with conservatives objecting to such subsidies even more strongly than liberals. What is more, both liberals (74 percent) and conservatives (70 percent) favor increasing foundation and DAF payouts to 10 percent, even if it would reduce foundation assets in the future.
When it comes to DAFs, survey respondents across the political spectrum expressed even more intense support for moving the money sooner rather than later. Americans want a relatively quick return, with a relatively short timeline for grant-making:
The more the public understands how tax loopholes allow for the taxpayer-subsidized warehousing of charitable dollars, the more they support a systemic change in philanthropy. The results are clear — an informed public is solidly behind common sense reforms that would curtail the warehousing of charitable wealth.
by Chuck Collins
/by Helen Flannery
Rising like monsters from the deep, donor-advised funds (DAFs) have finally caught up with foundations as the wealthy donor’s charitable warehousing vehicle of choice — and are poised to eclipse them.
by Helen Flannery
/by Chuck Collins
As inequality has grown in the U.S., the nation’s charitable system is in danger of becoming a taxpayer-subsidized platform of private power for the ultra-wealthy. This poses risks to the independent nonprofit sector and our society as a whole. It's time for reform — and we have some ideas.
by Chuck Collins
Concerns about warehousing charity dollars and tax subsidies for wealthy donors and perpetual foundations transcend partisan divide.