Abstract
Abstract Donor Advised Funds (DAFs) are the fastest growing destination for charitable giving, and subject to vigorous debate over whether they should be more tightly regulated. Virtually all of the research on DAFs and the arguments for increased regulation emanate from the US. This article compares regulation in Canada and Australia with the US to demonstrate how different regimes lead to different uses of DAFs and different ‘market’ configurations. The conceptual framework presents three motivational scenarios for their use: as pseudo foundations, tax savings and protection of privacy. The differential effects of regulation on these donor scenarios explains why total DAF assets in Australia are proportionately much lower than its North American counterparts, mainly because its regime is not skewed as heavily toward the tax savings motivated donor. The findings raise serious questions as to whether DAFs have actually democratized philanthropy, as is so often claimed. In terms of policy change, all three countries have experienced policy drift, although for different reasons. However, COVID-19 pandemic may have created new windows of opportunity for regulatory reform.
Highlights
Donor Advised Funds (DAFs) are the fastest growing destination for philanthropy in the US and a rising force in other countries (CAF and UK Community Foundations 2018; National Philanthropic Trust 2020; Seibert 2019; Strategic Insight 2018).This work is licensedDAFs are personal charitable giving ‘accounts’ held by a charitable organization for which the donor receives a tax benefit upon making the gift and retains advisory privileges on disbursements, including recipients, amounts and timing
It is difficult to ignore that DAFs have a growing problem of legitimacy, which has been amplified by the global pandemic
This paper presents three scenarios that capture the various priorities donors apply in their use of DAFs: as pseudo foundations, tax savings and protection of privacy
Summary
Donor Advised Funds (DAFs) are the fastest growing destination for philanthropy in the US and a rising force in other countries (CAF and UK Community Foundations 2018; National Philanthropic Trust 2020; Seibert 2019; Strategic Insight 2018).This work is licensedDAFs are personal charitable giving ‘accounts’ held by a charitable organization for which the donor receives a tax benefit upon making the gift and retains advisory privileges on disbursements, including recipients, amounts and timing. As the COVID-19 pandemic exacerbated inequalities and heightened demands on nonprofits, the pressure to ramp up philanthropic grantmaking, rather than saving funds for a future rainy day, intensified – as did pressures for DAF reforms (Initiative to Accelerate Charitable Giving 2020). In spite of their importance as philanthropic vehicles in many high-income countries, research on DAFs has been overwhelmingly focused on the US. There is little comparative research on the effects of regulatory regimes elsewhere (cf. Murray 2020), whether the reform options proposed in the US are relevant to other countries, or whether the features of DAF regimes elsewhere might inform US debates
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