Donor Advised Funds: Can We Have a Discussion?

There’s certainly a lot of conversation swirling about donor advised funds, and given the ongoing surge in their popularity, it’s safe to assume that this conversation will continue unabated. That’s a good thing. For too long, the social sector has been loathe to take on tough issues publicly and, instead, has sidestepped disagreement in favor of “being nice.” (See “Is Philanthropy Killing Itself With Kindness?” and “Open Debate, Not Politeness, Is What Drives Innovation“). Or, the teeth gnashing and angst occurs behind closed doors.

The growth of DAFs has raised important and thorny issues that deserve thoughtful exploration and discussion. To date, it’s been a bit of a face off between those who are alarmed by DAF’s lack of transparency and “fund warehousing” and those who see DAFs as a potentially significant income source that helps spur more giving by individual donors.

Recently, the Chronicle of Philanthropy published an op-ed by Jason Franklin and Tyler Nickerson  lays out ways in which DAFs might actually be an opportunity to “reimagine philanthropy.” No, it’s not the magic bullet, but it’s a valiant attempt to transcend and disrupt the rather polarized debate this issue has ignited.

What we really need is more data and analysis about DAFs. Do they really promote more giving among individuals? And just how much is being given to nonprofits over time? Which subsectors or issue areas receive the bulk of funding? A recent tweet from Phil Buchanan, for example, asks whether DAF giving is leading to an increase in what NPOs receive because it’s inciting new giving and/or “replacing foundations that would have otherwise been formed and generally have a lower payout rate?”

We need more studies because as DAFs grow, so does the call for regulatory and other policy mechanisms aimed at reining them in. (See: “Do DAFs Require Regulatory Attention?“) The best policies, however, stem from rigorously compiled and analyzed data — preferably, from impartial parties with no dog in the fight. Are these out there?  If not, can we make that happen — and soon?