To the Editor:
I share Craig Kennedy’s concerns about ensuring charitable contributions don’t go towards organizations that promote hate (“An Unlikely Event — the Israel-Hamas War — Could Finally Spark DAF Reform,” December 6). As an LGBTQ+ community member, I have never been more mindful of my actions in public settings, even living in a progressive city like San Diego.
Hate is a scourge in America and one that should not be fueled by charitable dollars. This stance is shared by the San Diego Foundation, which I lead, and supported broadly by the field, including through the Values-Aligned Philanthropy initiative at the Council on Foundations.
But Kennedy’s claims about how DAFs could be misused gives the impression, without evidence, that this issue is rampant and doesn’t mention that there are other ways to give anonymously, such as through a no-name trust. If stopping hate is the goal, perhaps we should investigate all the ways by which hate-focused groups obtain nonprofit status and amass charitable contributions. The column also ignores the positive impact DAFs have for thousands of legitimate, high-quality nonprofits promoting peace and a better world.
Donor-advised funds are the most efficient way for any individual to be a philanthropist. A DAF can be established in hours or minutes thanks to new online platforms. Maintaining one doesn’t require accountants and lengthy IRS forms as private foundations do. Recommending grants is easy, no matter if your DAF is at a commercial provider or a community foundation, such as the one I lead. You only need to keep one receipt for tax purposes, instead of amassing receipts for every nonprofit you support.
DAF donors do get an immediate tax deduction for their contribution, but that’s critical for the health of the nonprofit sector. Donor-advised fund holders like me may not know which charities they’ll support at the time the DAF is established or refilled. But having one allows us to recommend unrestricted grants to organizations that make our hearts sing. We can do that quickly, responsively, and with far less burden to the recipient nonprofits, who don’t need to send a tax receipt, let alone a time-consuming grant report.
Criticisms that DAF providers and their fundholders are warehousing charitable dollars is without any strong evidence. San Diego Foundation saw a 29 percent payout rate from all DAFs in the latest fiscal year. The latest National Philanthropic Trust report mentioned by Kennedy shows that nationally, private foundations held $1.1 trillion in assets and granted out $99 billion in 2022. All DAFs held one-fifth that total — $228 billion — yet gave $52 billion in grants for an overall payout rate of 22.5 percent.
Proponents of the DAF warehousing theory should really focus their animus at the foundations that adhere to 5 percent payout rates, which includes overhead costs such as salaries, office space, travel, and administration. Why would we want to enact policies that make DAFs more like private foundations and not the other way around?
The column has prompted me to review our existing anti-hate policies. It’s also made me even prouder to lead a community foundation that’s using DAFs alongside our other giving tools to build a better future for all San Diegans.
Mark Stuart
President and CEO
San Diego Foundation