Individuals and organization who mediate donations have been finding lately that donors are being much more cautious when deciding just where they’d like to give their money. Rather than donating to general funds that seem to cover a blanket of causes (one where the final decision is made for your in terms of what your donation goes toward), people want to maintain control of their contributions and choose where it goes themselves. As such, donor-advised funds are beginning to gain traction.
Donor-advised funds, or DAFs, have been growing at a much faster rate than that of private charities and organizations, with their asset values having more than doubled between 2010 and 2015. One of the main reasons why donors have been choosing DAFs over general funds is because of their flexibility. Those wishing to give are able to adjust their prices to best fit what they feel is an impactful donation, to a cause they are passionate about. However, these have been met with backlash from fundraisers around the world.
Because donations are sent to directly to DAFs, certain fundraisers have expressed concern, saying these contributions should go directly to their respective causes. Relationships are somewhat hindered as well due to DAFs allowing donors to remain anonymous, thus taking away the human aspect of giving.
But, that is not to say that these are purely disadvantages. This flexibility has seemed to attract more donors than it has scared away. For example, the anonymity provided could prevent other organizations from reaching out to a donor that they feel would support their cause, spamming their inboxes with incessant emails.
Technology has been changing fundraising as well, for better and worse depending on your personal stance on the matter. There is no doubt that communication has become much more far-reaching with the latest technological advancements. Donors are able to connect with organizations they care about much more easily through a variety of mediums. However, some see this ever changing flow of technology as a little troubling, simply because of the possibility that traditional flows of fundraising will be disrupted in some way.
Another strong case for giving to donor-advised funds are the tax benefits that come with them. When donating to DAFs, donors are given an immediate tax deduction depending on the type of contribution assets and adjust gross income. These can be anywhere between 30% and 50%. Investing in DAFs are also growable, tax-free assets, meaning more will be available over time, and with positive returns.
Donor-advised funds and innovations in general throughout the world of philanthropy are changing the way donors give, and organizations receive. Though it is met with some controversy, it’s best to look at it in a positive light. Almost everything changes with time. Why resist a change in philanthropy if it is making donating easier than it has ever been?