Attacking Donor Advised Funds

MoneyLockedUpPerhaps it’s a sign of the success of donor advised funds that they’re getting more negative press.

A commentary in the “New York Times” by an author for “ProPublica” took sharp aim at the rapid growth of donor advised funds portraying this as a harmful development.

As described in the preceding post on this site (click here), donor advised funds permit a donor to take a deduction for tax purposes when money is put into the fund even if the money never makes it to a charity.

The commentary suggests that donors and large money managers, who manage the funds, may have little incentive for the money to get to charities once the tax deduction has been obtained.  The money may simply accumulate.

This reminds me of the historical criticism of wealthy families creating their own charities to obtain tax deductions without immediate use of the funds in some charitable endeavor.

In either the donor advised fund or wealthy family charity situation, the donations are irrevocable.

A charity seeking capital should identify and pursue these pools of money to learn just what would elicit a donation.

I conclude that¬† it’s better to have the funds in these irrevocable pools than to have lost the money to some other form of deduction.

To read the commentary from “ProPublica”, click here.