Tag Archives: Vanguard Charitable

Strange Math

Here’s the world’s simplest math problem.

My wife Pat and I often meet a pair of friends for a movie. If there’s a risk that the show will sell out, I run over to the theater ahead of time and buy all four tickets in advance. When our friends arrive, we hand them their tickets and they pay us back what they owe us.

So the question is this: how many tickets did the movie theater sell?

Four, of course.

But in the parallel universe of donor-advised funds (DAFs), where double-counting comes as naturally as breathing and dissembling, the answer would be six.

Let me try to explain the inexplicable. Continue reading

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The Year in Review

Yes, I write a lot about donor-advised funds. That’s because their surge in popularity is the biggest story in philanthropy – and, to my mind, a growing threat to an already-battered nonprofit sector.
Here are 2014’s eight biggest developments around the donor-advised fund phenomenon. Continue reading

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Tsunami

[Note: This post was published as an op-ed in the Chronicle of Philanthropy on October 28, 2014.]

Each fall the Chronicle of Philanthropy publishes its “Philanthropy 400,” a list of the nonprofit organizations that raised the most money in the previous year. Last week’s publication of the 2014 Philanthropy 400 created a stir by sadly confirming what many of us have feared for the last several years: an inexorable takeover of the charitable sector by Wall Street.

Three of the top 10 fundraising organizations on the list are donor-advised funds (DAFs) affiliated with financial firms: Fidelity (No. 2), Schwab (No. 4), and Vanguard (No.10). A fourth organization in the top 10, the Silicon Valley Community Foundation, is also primarily a sponsor of donor-advised funds. Money is flowing into advised funds, rather than to nonprofits that provide actual services. This accelerating trend of warehousing philanthropic dollars is a deeply troubling trend for American philanthropy. Continue reading

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Donor-Advised Funds: By the Numbers

Last week I participated in a terrific debate about donor-advised funds with my good friend Stuart Comstock-Gay, the president of the Vermont Community Foundation. (Thank you, Planned Giving Council of New Hampshire and Vermont, for inviting us!)

Stu and I found a lot of common ground, as well as several areas where we cordially agreed to disagree. Stu made the case for donor-advised funds, saying that their flexibility and low entry point encourage charitable giving and democratize philanthropy — private foundations for the average person. He also emphasized their efficiency. I brought out my concerns (familiar to readers of this column) that donor-advised funds were attracting money that otherwise would be going to actual charities. I also pointed out that money goes into donor-advised funds more readily than it comes out, and I described the unethical financial incentives that are driving the growth at commercial gift funds such as Fidelity.

In preparing for the debate I came up with some numbers that I think illustrate the challenges posed by donor-advised funds. (Because we were meeting right across the river from Dartmouth College, by far the largest fundraising operation in Northern New England, I make references to Dartmouth in a few places.)

The numbers:

Continue reading

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