Foundations shift billions to donor-advised funds, skirting US laws requiring transfers to the needy, a Bloomberg analysis finds.
Read below for an excerpt from Bloomberg’s analysis:
“In more than 1,000 instances, foundations would have fallen short of their required payout for the year were it not for contributions to DAFs, according to Bloomberg’s analysis. If they’d paid out exactly what they were supposed to in previous years, closing the loophole could have forced them to push an additional $800 million directly to working charities over the six years examined. That’s more than twice as much as the annual expenses of the Alzheimer’s Association or the World Wildlife Fund.”
“DAFs are essentially investment accounts, with a few twists. People who use them give irrevocable control and ownership to a nonprofit in exchange for charitable tax advantages. In practice the nonprofit organizations that sponsor the funds, including many set up by financial companies specifically for that purpose, almost always defer to donors’ wishes, imposing no disclosure requirements and no deadlines for disbursing the money to working charities.”
“The flood of assets into the funds has irked lawmakers, nonprofits, and even some billionaire philanthropists. They’re calling for new rules to unlock more of the almost $1.5 trillion in private foundations and DAFs—a pool of money earmarked for good causes but impossible for most nonprofits to access. The needs have never been greater, says Melanie Lundquist, who with her husband, California real estate developer Richard Lundquist, has committed $400 million to charity. After receiving a tax break for a donation, ‘I just don’t think we have the right to shelter that money.'”
Read the full article from Bloomberg here.