Council on Foundations’ DAF Recommendations Deserve a Closer Look
February 11, 2022 | Read Time: 2 minutes
To the Editor:
We write as members of the Strengthening Community Philanthropy Working Group, convened by the Council on Foundations to identify strategies to strengthen the use of donor-advised funds. Our recommendations, released last week, are informed by the available data and the real-world experience of community foundation leaders like us. We and dozens of others who have engaged with us in our deliberate, six-month process believe that these strategies taken together would improve philanthropy without undermining or slowing down charitable giving.
However, the Chronicle of Philanthropy’s reporting — “Community Funds Urged to Set Annual Distribution Rate” — gives the recommendations less than a fair shake, quoting only critics and none of the many supporters. It also focuses almost exclusively on the 5 percent payout requirement, which is just one of five recommendations that complement each other.
We can all acknowledge that much of the criticism of DAFs is based on a worry that many of them are sitting dormant, providing tax breaks but not helping nonprofits and communities.
As the people working with these funds and engaging with our donors day in and day out, we can assure you that is not what is happening. Some donors keep funds in their DAFs or endow them to help meet community needs far into the future, or to involve future generations in their giving. For many, the power of endowment is real, lasts, and multiplies the impact of those funds. In the small number of cases where funds are truly dormant, our recommendations aim to address the issue.
To those who say our recommendations aren’t strong enough, we say this: Please, join our conversation about ways to improve them. This is just a first step, and we are all better off working collectively to increase transparency while also ensuring that donor-advised funds remain the flexible, highly effective giving tool that our communities depend on.
Susie Nelson
Executive Director
Community Foundation for the Ohio Valley
Kristi Knous
President
Community Foundation of Greater Des Moines
Editor’s note: Kathleen Enright, chief executive of the Council on Foundations, was quoted in the Chronicle of Philanthropy article this letter cites.
