I often hear donor-advised funds marketed as “giving, simplified.” I appreciate the gist of this. Donor-advised funds allow donors to contribute appreciated securities in one fell swoop. The donors can then oversee the charitable distribution at their leisure, while DAF sponsoring organizations like Fidelity Charitable or a community foundation keep the books. Yes, in some ways donor-advised funds are indeed simple.
But as the number of donor-advised funds has increased, so too have the challenges for nonprofits and the donors themselves. That’s because there are some very real legal restrictions on how grants from donor-advised funds can be distributed. DAFs are often marketed by their purveyors as “charitable checkbooks,” but unlike actual checkbooks, they come with strings attached. These restrictions are increasingly causing headaches and inefficiencies for nonprofits, while giving rise to misunderstanding and resentment between those organizations and their donors. Continue reading