Most people are aware of the differences between public charities and private foundations. However, donor advised funds, or DAFs, are often not understood as well. Donor advised funds have been around for many years, but they have changed and evolved significantly over the years, and many nonprofit organizations and fundraisers could benefit from a greater understanding of how donor advised funds work and what their pros and cons are.
Today’s guest is Brian Mittendorf, the chair of the accounting department at Ohio State University’s Fisher College of Business. Brian joins the episode to help explain how donor advised funds work, what controversies surround the practice of using donor advised funds, and where this segment of charitable giving is headed in the future. Listen to the episode to hear what Brian has to say about why donors choose to use DAFs, what a commercial DAF is, and how the new tax laws affect donor advised funds.
Topics Discussed in This Episode:
The basics of donor advised funds What made DAFs popular How donor advised fund sponsor organizations’ work Why donors choose donor advised funds Where commercial DAFs got started and how they work The type of control DAF donors have over what happens to the funds they donate What happens to the money donated to a DAF and how it’s disbursed Questions over whether donor advised funds need more regulation Controversies around donor advised funds How the new tax law has incentivized giving through donor advised funds How DAFs handle non-cash donations, like stock The future of donor advised funds and how regulations, or a lack of regulations, will affect that futureResources:
“Most individuals probably don’t have the resources to set up an entire private foundation, but if you think of them as the resources as a bunch of individuals being pooled together, then it’s going to be worthwhile.”
“There’s not one person who’s really rich, but if we pool together a lot of different people with the same mission in mind, we can achieve a lot. Kind of what a private foundation could have.”
“If I want to talk about a broad controversy, it’s that donor advised funds are typically used as vehicles that are really convenient for donors, and people who are concerned with them are concerned that they’re focusing more on donors than they are on the mission.”
