On the Flip Side

Are donor advised a solution or a problem, part 2

In the wake of my last article on donor advised funds (DAFs), I got a couple of emails back from people who said I am 100% wrong. I also acknowledge that this is mostly a US issue, so please forgive the provincial topic. At the same time, the US remains the economic engine of global missions. That is not going to change significantly any time soon, particularly with the end of globalization, which will favor the US and Canada immensely.

Before I go forward and share this with you, let me suggest that the comments section, below, is a great place to push back. I welcome feedback, both positive and negative.

The primary arguments made for DAFs were:

• They create more giving than if they were not available.

• They reduce the government burden on giving.

• They involve donors in the strategic portion of giving.

More Giving

Ah, taxes, that inevitable bite out of our paychecks and profits. DAFs most certainly assist donors in avoiding taxes and redirecting those funds from government coffers to worthy charities. In this, I agree. DAFs reduce the tax burden of major donors.

The new standard deduction, introduced just two years ago, makes it unlikely that us small paycheck donors will itemize. We don’t get the benefit of a charitable tax break like we used to. I recall the conversations of days gone by about the potential of losing the charitable deduction. People were worried about it. Yet, since the standard deduction has made this tax break mostly useless, charitable giving is up. Not down.

The important thing to note here is that big paycheck (often, big asset) donors are in a different place than most of us. The tax break that they get from smart giving makes a difference. They are not taking the standard deduction. I do not doubt that there is more charitable giving because of this. Certainly, DAFs facilitate this and therefore help generate more giving.

I know that some see paying taxes as a moral good, which is a relative question. For major donors, tax burdens are quite high and I, for one, am glad they can protect themselves from taxes by giving, particularly if that money is going to support the global Great Commission.

Reduced Bureaucracy

It is much easier to set up a DAF than it is to create a private family foundation. Groups like the National Christian Foundation have made this process simple and hassle-free. They assist with the ongoing reporting and provide you with reports on the accounts you have. You do pay for this, of course, but it is reasonable. You are not under the rules that a foundation must abide by. Government oversight is easier with a DAF. Thus, for a major donor, a DAF makes a lot of sense pragmatically by reducing administrative hassle.

Strategic Giving

Finally, a big benefit noted to me was that by using a DAF the donor is more likely to get involved in how the money is being spent than if they simply wrote a check to a charity. They can hold back their giving until the timing is right. They can be more selective. Often, ministry leaders let them in on the inner workings of the ministry because they are now significant investors. This all leads to a more educated and involved donor.

I am not sure I buy this argument 100%. The unsaid portion of this claim is that the donor knows more than the charity about how to use funds. I have personally seen this to not always be the case.

In my previous article, I suggested that DAFs were problematic. Here, I give a few reasons why people use them. With billions of dollars in assets sitting in DAFs right now, my suggestion to donors is to get busy and give that money away. When you pass out of this life, make sure those funds were used for what God called you to use them for. Do not let them sit in an account, enriching a DAF company through fees.

Give it and give it generously. You will be blessed!

[image: Midjourney with prompt “an horse accountant working at his desk filing taxes in the style of pixa”]