
Silicon Valley’s Favorite Philanthropic Loophole - ausbah
https://www.vox.com/recode/2019/7/2/18691693/silicon-valley-donor-advised-funds-fidelity-charitable-lawsuit
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hundt
There may be a good case against Donor Advised Funds, but this article doesn't
really make it.

It argues that DAFs may be "crowding out" contributions to charities, citing
the fact that Fidelity Charitable raised more money than the United Way in
2015. But that is not evidence of anything. To a large extent Fidelity
Charitable is basically an aggregator of charitable donations; comparing the
total amount aggregated to the amount received by a specific charity is not
illuminating.

There is a complaint that a DAF may allow investors to park money forever
(although these articles never identify why it would be in their interests to
do so). But the big bad guy, Fidelity Charitable, imposes similar "minimum
grant activity" requirements on their DAFs that private foundations have by
law. And they disclose that across all accounts, 28 percent is disbursed per
year, far more than the requirement for private foundations.

An consultant to non-profits says "I have seen so many of my clients, the
nonprofits, be hurt by it" but the article does not specify what the harm is
or its mechanism.

If so many people are complaining about them I feel like there must be
something wrong with Donor-Advised Funds but for the life of me I can't figure
out what it is from these articles that keep coming up.

~~~
hundt
To answer my own question: I googled that consultant and found a series of
articles on his personal blog with meaningful criticisms of DAFs from the
perspective of "real" charities (the ones that provide services or advocacy),
including:

* They prevent charities from attracting donors with benefits in exchange for donations.[0]

* DAF donations can't be used to satisfy a legally binding personal pledge.[0]

* A DAF can be used to "launder" contributions in a way that hides their original sources and enables fraud.[1]

* A private foundation can meet its 5%-per-year disbursement requirement by donating the money to a DAF, including one controlled by the foundation, violating the spirit of charity laws.[2]

[0] [https://www.alancantorconsulting.com/2015/06/not-so-
simple/](https://www.alancantorconsulting.com/2015/06/not-so-simple/)

[1] [https://www.alancantorconsulting.com/2019/02/phony-and-
corru...](https://www.alancantorconsulting.com/2019/02/phony-and-corrupt/)

[2] [https://www.alancantorconsulting.com/2017/10/a-tale-of-
two-l...](https://www.alancantorconsulting.com/2017/10/a-tale-of-two-letters-
and-two-sectors/)

