New York Community Trust President, Lorie Slutsky, Joins Community Foundation Leaders to Discuss the Role of Donor Advised Funds in Their Communities
The rapid growth of donor-advised funds (DAFs) is one of the major stories in charitable giving. As community foundation leaders, we need to understand the impact of this growth and ensure that those who manage and donate to these funds adhere to best practices.
We know there have been some recent and high-profile examples that have given people cause for concern. When this happens, it is important to learn from these missteps, reflect, and make sure we have the right rules and regulations in place. These are conversations we have had and will continue to have with each other, regulators, and members of Congress.
But we also want to make sure that we don’t let a few bad examples distract from the fact that DAFs are also a vehicle that raises billions in charitable donations to provide critical services and solve important problems in communities across the country.
For more than 80 years, community foundations have seen this value first-hand. We created donor-advised funds as an option long before for-profit companies like Fidelity and Vanguard established their own charitable arms. And we have worked diligently to ensure they are used to improve our communities.
Community foundations work to improve the quality of life in a specific geography. They manage all of the funds entrusted to them—unrestricted, field-of-interest, scholarship, designated, and donor-advised—with the goal of creating more (and more strategic) charitable giving for the benefit of the communities we serve. DAFs are not standalone entities, but one important arrow in the quiver to accomplish our work. Many of us complement grants from DAFs with a larger pool of endowed funds to amplify our impact now and for generations to come.
While we know the recent growth brings scrutiny, we are concerned that some of the most vocal critics of DAFs have not worked directly with donors to understand their motivations and behaviors. We fear that the most common, broad-brush proposals for reform would have the opposite effect these critics intend: less money going to charity, not more.