Red or Blue, There’s a DAF for You

Red or Blue, There’s a DAF for You

Aug 13, 2021 Patrice Onwuka

Donor-advised funds (DAFs) are a hot topic in the philanthropic world right now. Recently, the role of DAFs in the recall efforts against California Gov. Gavin Newsom garnered some attention. DAFs even face new federal legislation to regulate how they operate. A perennial criticism of these charitable giving vehicles lobbied by lawmakers and activists is that donors can use their cash to influence public policy without attaching their name to it. 

Let’s be clear off the bat that DAF gifts must go to 501(c)(3) charities. These organizations are prohibited from conducting significant political activities. Yet right-leaning donors are regularly vilified for using DAFs to support charitable organizations that advance principles of personal liberty, the rule of law and the free-enterprise system. Americans who believe civil society and private industry are better than the government at solving some of our most pressing issues, especially at the local level, can support organizations whose missions align with those beliefs--and do so anonymously. Likewise, donors who want to maximize the role, power and resources of government to address problems can fund work that pursues those ends.

However, some on the left only take issue with giving to conservative causes and giving anonymously. Private giving vehicles like DAFs are tools for everyone and that’s a good thing for philanthropic freedom. 

DAFs are a valuable to donors with a wide range of ideologies, including those who support progressive policy changes. Tides Foundation, for example, is one of the most well-known philanthropic organizations or enterprises that champion liberal causes. Four decades ago, philanthropist Drummond Pike pioneered the use of donor-advised funds for policy change when he founded the Tides Foundation. Early on, he helped those on the left fund the creation of mission-based organizations. 

In one case, Hollywood producer Norman Lear established what would become one of the leading progressive groups in the 1980s, People for the American Way. Since then, Tides has facilitated more than $3 billion in grantmaking and projects supporting over 1,000 organizations. Last year, Tides partnered with Black Lives Matters (BLM) to help fund the social justice movement. Tides also gave close to $100 million for COVID-19 response efforts. Tides continues to support causes nationally and internationally that advance LGBTQ rights, global warming and other causes.

In our highly polarized society, donor privacy is essential to prevent a chilling of giving, especially when it comes to controversial causes. Donors can face a gamut of negative responses to their giving choices, from public shaming to physical harm. It’s not surprising that one may not want his or her name to be associated with some gifts. For example, a conservative donor may not want his gift to a local LGBTQ group publicly known just as a liberal donor might not want her donation to a gun rights group splashed across a website. Anonymity is their right and one that should be protected, even if one disagrees with their goals.

To avoid the unwanted attention, unwarranted scrutiny or reprisal, individuals--and sometimes even foundations--may channel giving to causes through DAFs. Contrary to how such giving is characterized today, donor anonymity does not signal nefarious motives, but a desire to keep the gift focused on the mission of the receiving organization. 

Yet, lawmakers who grandstand about conservative dollars flowing anonymously to controversial causes make the gifts out to be sinister and call for greater oversight. For example, some senators have attacked charitable giving to conservative public policy groups but have relied on research from or spoken at events hosted by parallel groups on the left. Charitable giving is not political giving and should be protected regardless of one’s ideology. 

Charitable giving protections are not limited to certain types of organizations such as human services and education. Research, prevention efforts and systemic reform are all elements involved in solving intractable societal problems that are worthy of philanthropic dollars regardless of the philosophical orientation of the donor. 

The next time you hear someone railing against donor anonymity in causes associated with the right, consider that the same argument could be made from the opposite side, and both would be equally wrong.