Donor Advised Funds: A giving tool for the modern philanthropist

We have always been tremendously proud to be able to partner with individuals and organizations who have a desire to make a positive impact on communities. Our donors support issues of personal significance from their past as well as ones they learn about as they connect with new communities over time. They dedicate their time and resources to organizations and people who are working on the most challenging issues that face us today.

In recent weeks, there has been a heightened national discussion in the media on the role of donor advised funds. Over time, we at SVCF, members of our community, and peers across our field have listened closely and shared our beliefs and thinking on this topic. It has been disheartening, therefore, to hear renewed criticisms of donor advised funds, which have been a key component in the growth of philanthropy here at SVCF and across the nation. The philanthropy made possible by donor advised funds makes a profound, healthy impact on our communities.

The rise in donor advised funds correlates with a shift in donor thinking over the past decade or so. Traditionally, many donors have thought about philanthropy in the context of creating a legacy. For these donors, a private foundation or an endowed gift to a single organization has made a lot of sense because these are vehicles associated with perpetuity. However, many donors have shifted to a philosophy in which they engage in philanthropy in the present. They wish to give away a large part of their philanthropic assets during their lifetimes and seem to be less interested in creating legacies that last in perpetuity.

Silicon Valley Community Foundation engages a diverse group of individual donor families and organizations. We assist them in achieving their charitable goals, whether those objectives involve supporting charities here in Silicon Valley, across the country, or around the world. We follow a strict internal cadence to ensure we properly account all of our grants and assets, and we take our responsibility to steward charitable assets very seriously. These assets will benefit charitable endeavors today and for generations to come.

  • Not all donor advised fund providers are the same. Community Foundations provide DAF holders with insights about community needs and expertise on impactful philanthropy.
  • Donor advised funds at SVCF with more than $1 million in assets have an average payout of over 15 percent per year, three times higher than the minimum payout private foundations must make.
  • A donor advised fund at SVCF can be opened at a minimum of $5,000. It is not simply a philanthropic tool for the wealthy.
  • In 2017, 71% of our 1,151 donor advised funds were active in making grants. That level of activity is how SVCF was able to grant $436 million to nonprofit organizations across the Bay Area, much more than any other local grantmaker. Total SVCF grants amounting to $1.3 billion were made in 2017 to nonprofit organizations around the world.
  • SVCF has an inactive funds policy that states that if a donor does not advise any grants from their donor advised fund for four years, the fund is transferred to SVCF’s endowment.
  • SVCF has worked closely with Sen. John Thune and others in Congress to champion greater transparency, and recommended passage of the CHARITY Act in the tax bill as a way to achieve this goal.

Our approach at Silicon Valley Community Foundation has broken barriers of entry into philanthropy for many. We work closely with donors to understand how they want to make our community and our world a better place, and to help them turn their visions into reality. While some philanthropists are excited by the possibility of running a private foundation, others prefer to partner with SVCF so that we can handle the administrative aspects of their philanthropy, allowing them to focus on their passion for giving. Some donors choose to utilize both vehicles, among others.

Operating in Silicon Valley, we and our donors confront and address significant social, economic and infrastructure challenges that the public sector cannot address alone. Despite the impact made, we realize that an organization like SVCF will naturally face questions about why we are not doing more. To those questions, we can confidently respond that we and our donors, assisted by the growth of donor advised funds, can and will do even more to have a positive impact on our communities.