Donor Advised Funds

I had not heard of donor-advised funds until I read about them quite recently. They are funds similar to private foundations, where the donor can advise where his or her money is to go. Say you have a few millions, instead of donating them straight to a charity, you can give them to a DAF and instruct them where to disburse the money. Perhaps a family member has had cancer raising your interest in the disease and you would then specify the money is to go to a cancer charity, or as I understand it, a specific organization. These funds have recently come to attention because of an article written in the New York Review of Books stating that they interfere with the amount of money given to other charities, meaning that as a result less money is reaching the many charitable causes which are not mentioned by given donors. Once a wealthy person donates to a DAF they immediately get the tax deduction, plus the work is done for them, the fund does it. But then, the article’s authors wonder, donors may be less inclined to give to other organizations and causes. There is no law specifying how much or when the DAFs are to disburse their money, so they can sit on it, which may be to their advantage, having then a larger pool to invest. Private foundations are mandated to disburse at least 5% a year. DAFs are unregulated. Following the New York Review of Books article, the Washington Post then wrote its own article drawing needed attention to the funds. I Googled “donor-advised funds” because I wanted to know which charities had benefited and was not able to find out, neither was an acquaintance who works with fund raising for non-profits. The names of the funds are listed though, the biggest being and
F. Scott Fitzgerald did tell us that the rich are different from you and me, indeed most of us don’t have huge sums to give away. Besides, sadly, in our culture to do what is best for oneself is increasingly the accepted norm, not what is best for the society. It makes it perhaps unfair to therefore blame the rich for doing what they are doing, in this case for giving where the tax deductions will be best for them. The authors of the NY Review of books article ask for the funds to be regulated. And that would be a way to begin since at present it seems those funds are of greater benefit to the donors than to any cause. Given that the donors receive tax deductions, because these donations are presumed to benefit society, both donors and funds ought to be made accountable in some fashion.