Published:
May 30, 2020
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Every year over $400b is given to charitable causes in the U.S. – around 2% of GDP. There are various ways to give, but the most common are direct donations or increasingly through Donor-Advised Funds (DAFs) – which now account for over $110b of assets but only $30b of donations.
DAFs are best described as a “waiting room” for charitable donations. People who wish to give money to charity irrevocably deposit money (or securities) into a DAF account, where they can continue to invest it (aggressively or conservatively) while deciding how to donate the money far into the future.
Critics of DAFs point to the large gap between the immediate benefit of the tax-deduction while donors maintain “control” of the assets and the disbursement over an extended period of time. Some proposed legislation is trying to maintain transparency around disbursements.
Mark Zuckerberg and Jack Dorsey recently announced the transfer of Facebook and Square stock into DAFs. Dorsey manages his DAF through a google sheet (you can track it here) with transparent donations.
With the tax benefit and the discretion on how the donations get spent those that are opting for DAFs are probably saying it is DAFintely worth it.
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DAFinitely Worth It
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