Why Everyone Should Be Free to Give through Donor-Advised Funds

Philanthropy Roundtable’s Free to Give campaign elevates the voices of everyday Americans who have dedicated their careers to supporting those in need. Their work is made possible by the freedom of all Americans to give to the causes and communities they care about.

All Americans—no matter their politics, race, religion or class—should have the freedom to give to the causes and communities they care about most. That’s why Philanthropy Roundtable launched its Free to Give campaign, which elevates the voices of everyday Americans who serve alongside amazing nonprofits. Over the next several months, the Roundtable will release a series of videos and blogs featuring donors and nonprofit leaders explaining the importance of philanthropic freedom.

One aspect of philanthropic freedom is the ability for donors to give through flexible vehicles such as donor-advised funds (DAFs). In a new Roundtable video, Tom Riley, president of the Connelly Foundation, sat down with us to discuss how DAFs are helping foundations and the charities they serve, as well as the potential consequences to the philanthropic sector if lawmakers place restrictions on these funds.  

Donor-advised funds give a lot of flexibility and creativity to donors from all ranges,” said Riley. “[They help] people who are just trying to get started as donors but [are] also a really useful tool for existing foundations.”

The flexibility of these popular giving vehicles allows donors to contribute a range of assets to a variety of causes in the amount and at the time of their choosing. These contributions appreciate tax-free for future needs, thus maximizing giving and philanthropic strategy long-term.

In the last Congress, lawmakers on Capitol Hill proposed legislation misleadingly called the Accelerating Charitable Efforts Act or ACE Act. If enacted, this harmful legislation would have placed restrictions on DAFs, including imposing arbitrary payout requirements and prohibiting private foundations from counting DAF gifts toward their required 5% payout rate, among other limitations. These types of proposals would restrict philanthropic freedom and ultimately hurt those who benefit from charitable giving.

“If Congress restricts the ability for foundations to give to donor-advised funds or to have it not count toward their foundation payout requirements, that’s going to shrink foundation giving. It’s going to make foundation giving more difficult, less creative and less effective,” said Riley.

All Americans deserve the ability to give both freely and strategically and to be able to respond to crises quickly or give long-term … without the threat of overregulation. DAFs make it possible for donors of every income to give to causes or communities that matter most to them.

“It’s really the power of the market at work in philanthropy,” said Riley.

View more stories about the importance of philanthropic freedom at FreeToGive.org.

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