Article Axios

Axios Explains Why Billions in Donations Haven’t Reached Charities

Last week’s Axios Capital newsletter reported on the payout rates of donor-advised funds (DAFs), breaking down how the increase in money going into donor-advised funds doesn’t necessarily result in increased payout rates or funding to charities:

“In reality, although disbursements from foundations and DAFs are up, most of them are still going to end the year with more money than they started it with… The bottom line: Pledging to give away your billions is the easy bit. Actually doing it — giving away so much money that your wealth goes down rather than up — is much rarer.”

The story, which references recent research by Initiative to Accelerate Charitable Giving member Professor Ray Madoff and Professor James Andreoni, illustrates the design flaws in the current giving rules around donor-advised funds: there are no incentives or requirements for DAFs to ever distribute their money.

The Initiative to Accelerate Charitable Giving believes DAFs can and should continue to play an important role in charitable giving, but this year has demonstrated the need to increase funds to working charities, not just philanthropic vehicles. Our reforms ensure funds donated to DAFs are made available to nonprofits and charities in a timely manner so they can meet the needs of this moment and the next.

Read the full article on DAFs here

Read “Calculating DAF Payout and What We Learn When We Do It Correctly” by Professors James Andreoni and Ray Madoff here