What Are Donor Advised Funds And Why Do They Hurt Charitable Causes? | Defined | Forbes

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Donor-advised funds are a way for donors to have more control over the funds they want to donate to charity. But according to Alan Cantor, a non-profit consultant, a lack of transparency and regulation of these funds has led to their abuse by individuals who want to park their untaxed wealth in funds or by people looking to secretly fund controversial causes.

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So misleading... It's unfortunate. It's not like someone can transfer money from a DAF back to themselves. It's going to charity, just potentially in a more tax efficient way.

travis

This is very misleading. If you put $ into a Donor Advised Fund, it is irrevocable. You are not hiding wealth. It is no longer yours. There could be some regulation around minimum distributions but really money is disbursed quicker from DAF than foundations. Personally, since markets tend to grow, planned giving through a DAF will lead to more being given away to a Charity on the long run. The question would be which is more beneficial 1 lump sum gift or regular annual gift that will likely be worth 2or 3 times the lump sum?

donmountford

I think your analysis is WRONG. With the huge federal standard deduction for tax purposes ($24, 400 in 2019 for married filing jointly), donor advised funds are the best way form most of us who are not super rich to be able to deduct our charitable giving. I stack my deductions into one year, including a large donation to a donor advised fund, and then dole out my giving over the next few years. I am now much more charitable, supporting more causes with larger donations, with a donor advised fund than I would otherwise if I could not deduct the contributions. Donor advised funds even are more tax efficient than just donating cash, as you pointed out in the video. DONOR ADVISED FUNDS ARE GREAT FOR PEOPLE WHO WANT TO DONATE TO APPROVED CHARITIES IN A TAX EFFICIENT MANNER.

jonwiersig

The transfer into the DAF is irrevocable. What happens to funds that sit in the DAF after you pass away? You cannot will a DAF. Wouldn't you need to have to have an eligible non-profit beneficiary? Otherwise wouldn't the DAF assets go to escheatment? If so - it would defeat the long-term purpose of the DAF as a tax sheltering strategy. Once in a DAF, the money is either going to a charity or back to the government, even if it takes a long time...I don't see how someone could say that DAFs "hurt charitable causes."

bradpiper

He forgets to mention the 21% grant rate from DAF's vs the 6% grant rate from private foundations. Oh by the way, private foundations report operational expenses within their grant rate, so the grant rate to the actual charities he is speaking about is closer to 3.5%. That is criminal!

dennisgerberjr

Honestly so incredible this video has less than 5k views

ezcircuits

I always wondered where all the “charity” money really goes. There are these people in need, and yet nobody ever sees this money. Scams

BrooklynBaby

Find an interesting quote from Judge Richard Posner back in 2006 where he criticised "perpetual charitable foundations", but I think applied to DAF too. Quote:" xxxx.... is a completely irresponsible institution, answerable to nobody. It competes neither in capital markets nor in product markets... and, unlike a hereditary monarch whom such a foundation otherwise resembles, it is subject to no political controls either... The puzzle for economics is why these foundations are not total scandals. "

ava