The debate about donor advised funds (DAFs) and philanthropy is breaking out into the public light, with the New York Times piece entitled How Tech Billionaires Hack their Taxes With a Philanthropic Loophole and a new report from the Institute for Policy Studies recent report, “Warehousing Wealth.” At the heart of the debate is the problematic ways DAFs can be used to accumulate assets and leverage tax breaks, rather than support nonprofit organizations. With growing intensity, the Chronicle of Philanthropy has been featuring the reform-minded insights of sector leaders like Jason Franklin and Tyler Nickerson, Don’t Waste the Donor-Advised Fund Debate. It’s a Chance to Reimagine Philanthropy and Tides Foundation founder Drummond Pike, How I helped create the Donor Advised Fund Monster – Inadvertently.
As we launch and grow the Amalgamated Foundation’s Advance Change Fund program, we’re aligning with the vision that DAFs are great vehicles for moving resources to the field, not simply to provide wealthy with tax benefits and institutions with asset growth. That’s why we created the 10% Giving Pledge, to encourage our donors to give away a minimum of 10% of their funds every year. That’s double the “payout” requirement for private foundations and far exceeds the average payout levels of most DAF providers.
We’re also proud that our fiduciary partner, the Amalgamated Bank, is a leader in the ethical banking sector, one of the nation’s first B Corp banks, with a long history of commitment to social change. The bank’s bottom lines are solidly aligned with the social change vision of the foundation.
Increasing payouts is just a first step to reimagining philanthropy. As we continue to evolve the foundation’s programming, we will be exploring other ways to ensure that is Amalgamated Foundation is helping to lead the way towards more responsive philanthropy. Our processes should respect grantees and minimize their burden. We should embrace calls for increased transparency. When possible, we should democratize decision making processes to include input from the field. And finally, our foundation should be a community of creative, well- informed, engaged donors who share this journey with us.