The Philanthropy Roundtable signed onto a letter to Senate Finance Committee leadership this week in response to a prior letter from donor-advised fund (DAF) critics Ray Madoff and Roger Colinvaux, who proposed increased regulations on DAFs. The Committee invited the response after Madoff and Colinvaux proposed implementing forced payouts on DAFs and disallowing transfers from private foundations to DAFs. The Roundtable joined more than 100 community foundations participating in the Community Foundation Public Awareness Initiative, the Council on Foundations and Independent Sector. In part, the letter states:
But these critics are suggesting a new set of restrictive rules based on conjecture, without first asking for more sunlight and data to inform Congressional action. If average DAF payouts are three times the private foundation payout rate, and the vast majority of DAF accounts are making grants regularly and/or the DAF advisers have plans in place for future activity, there doesn’t seem to be a public policy problem requiring urgent action. For these reasons, we urge the Committee to set aside the extreme proposals advanced by DAF critics and instead acknowledge the self-policing work of the sector by continuing to work with us and other practitioners to write legislation that reflects the realities of philanthropic work, as we did with the provisions around DAF disclosures, as outlined in the bipartisan CHARITY Act.
Sponsoring organizations for DAFs primarily include community foundations, single-issue charities and national financial institutions, such as Fidelity Charitable, Vanguard Charitable and Schwab Charitable. The letter sent to the Finance Committee this week effectively defends community foundations as sponsors of DAFs but almost all of the arguments apply to all DAF sponsors, including the national organizations, which is why the Roundtable was keen to sign it. The Philanthropy Roundtable does not favor one sponsoring organization over another. The flexibility that all DAFs provide leads to greater charitable giving over time as donors become more engaged and see the results of their grantmaking.
To read the full letter, click here.