Progressives are targeting donor-advised funds (DAFs) in a series of suggested regulatory reforms to dictate how individuals disperse their charitable donations
DAFs are essentially investment accounts for charitable giving according to Fidelity Charitable, one of the largest DAF providers in the country. The number of DAFs has more than tripled since 2014, making DAFs the fastest-growing charitable giving mechanisms in the United States, according to National Philanthropic Trust. The 728,563 DAFs in the U.S. as of 2018 were responsible for doling out $23.42 billion in grants that year, up from around $10 billion in 2012, as noted by Philanthropy Daily.
DAFs have increased in popularity among smaller donors because they give these donors of relatively modest means increased control over how and when they donate to charity. Individuals are able to place cash and other assets that are not easily transferable to charities  — such as stocks or cryptocurrencies — into these funds, according to Fidelity Charitable.
Not only do DAFs offer philanthropic individuals more flexibility, according to Fidelity Charitable, but they also help donors’ dollars go further because the fund may grow tax-free over time while the investor decides what cause is worth their donation.
Just like typical donations to charity, investors become instantly eligible for certain tax deductions based on the kind and size of the donated asset when they place assets into a DAF. Once an individual puts an asset into a donor-advised fund, the asset cannot be returned to the individual for personal use.
Under current law, if an individual places cash to a DAF, that individual becomes eligible for an income tax deduction of up to 60% of their adjusted gross income (AGI), according to the American Endowment Foundation. If an individual decides to donate stocks or securities to a DAF, they’re able to increase their donation amount, according to Fidelity Charitable. The donor also becomes eligible for an income tax deduction of the full fair-market value of the asset, up to 30% of their adjusted gross income, according to the American Endowment Foundation.
The Initiative to Accelerate Charitable Giving’s reforms are attempting to change that.
For DAFs, the Initiative to Accelerate Charitable Giving proposes placing a 15-year time frame for DAFs to distribute their charitable funds, according to their website. The reforms leave the door open to donors who want to extend their donation horizon past 15 years. However, the donor will face a delay receiving income tax deductions on their DAF contributions until those funds are distributed. By delaying tax benefits in certain circumstances, critics believe it will depress charitable giving.
The effort is backed by foundations from some of the world’s wealthiest families and corporations, such as the Hewlett Foundation, The Kresge Foundation and Ford Foundation, according to the initiative’s website. The value of total combined assets between the Kresge, Ford and Hewlett Foundation amounted to nearly $28 billion as of 2019, according to tax returns and other publicly available documents.








