This letter to the editor, authored by Silicon Valley Community Foundation, Austin Community Foundation and The Boston Foundation, was sent to Fast Company writer Ben Paynter on August 13, in response to his July article on donor advised funds.
To the editor:
Your two recent articles about the use of donor advised funds (“This popular form of charity might just be a tax shelter for the 1%,” July 27, 2018; “Is Silicon Valley’s giant foundation just hoarding money,” August 7, 2018) imply that people who have donor advised funds (DAFs) seldom follow through on making grants from their funds to benefit charities.
This is demonstrably not the first-hand experience of community foundations around the country, most of which offer DAFs as one of several different tools to promote smart philanthropy.
It is also not the belief of the authors of the study by the Institute for Policy Studies referenced in your article. “Donating to a DAF at a community foundation…is arguably more like donating to an active charity, since these sponsors are more closely connected to the specific causes, communities, and institutions they are dedicated to support,” the authors wrote.
To characterize donor advised funds at community foundations as if they were established with total disregard for the community is not only factually wrong, it does a stunning disservice to public philanthropy at this critical moment in our state and in our country.
Hoarding assets is not part of the community foundation business model. For community foundations, the goal of every dollar we steward is to strengthen investment in people and communities, not to stockpile wealth.
Every day, community foundations around our country see the impact that grants from DAFs have in our communities—in the health care centers that are open, the after-school programs that are available, the scholarships that are offered. Our payouts are high—significantly higher than at private foundations—and our donor advisors are active. Funds simply do not sit dormant for long periods of time, as some critics allege.
Because of this, community foundations have worked with policymakers from both parties to advance reforms related to inactive or dormant funds, to ensure that more DAF holders have such policies and demonstrate that the vast majority of DAFs make regular grants.
Community foundations like ours want more transparency, and we also want to encourage more impactful giving. This is why DAFs at community foundations are so important: We bring donors together to achieve goals they could not reach on their own.
Silicon Valley Community Foundation
Austin Community Foundation
Paul S. Grogan
President & CEO
The Boston Foundation