Latest news with #DAFs
Mint
05-08-2025
- Business
- Mint
Some billionaires pledged to give away much of their wealth. Why they haven't.
Since signing the Giving Pledge in 2010, Houston billionaires John and Laura Arnold have given away nearly $5 billion to charitable causes. According to the Charity Reform Initiative of the Institute for Policy Studies, a nonprofit that advocates for changes to the tax code to encourage more direct giving, the Arnolds are the only original signers to have fulfilled the pledge. That is, the Arnolds have given away more than half of their wealth during their lifetime—a core pledge principle. A spokeswoman for Arnold Ventures, the couple's philanthropic vehicle, didn't return a request for comment. The Giving Pledge was created by Bill Gates and his former wife, Melinda French Gates, and Warren Buffett in 2010 to encourage those with extreme wealth to part with at least half of it during their lives or via their estates after they die. The Giving Pledge was founded with 40 members in 2010, expanding to nearly 60 that year. As of May, there were 255 signatories, including 191 from the U.S., according to the Giving Pledge. In a new report, titled 'The Giving Pledge at 15," the Charity Reform Initiative of the Institute for Policy Studies makes a case for why the pledge is 'unfulfilled, unfulfillable, and not our ticket to a fairer, better future." Critics of the report, however, say its analysis distorts the giving of those who have signed the pledge. Charity Reform Initiative's key criticism is that the wealthy rely on private foundations and donor-advised funds, or DAFs, vehicles that provide philanthropists with tax breaks before any dollars reach charitable organizations. Philanthropists also use limited liability corporations, which have fewer tax advantages but give donors more flexibility in where to deploy dollars. The group advocates for reform of the Giving Pledge alongside 'meaningful policy change" that would move money out of foundations and DAFs more quickly and would increase transparency and accountability. To track pledger giving, the report's researchers looked at Internal Revenue Service filings from foundations, sources such as a data base compiled by Altrata's Wealth-X, Forbes rankings, the Chronicle of Philanthropy, and public media reports. In a statement, a spokesperson for the Giving Pledge—which doesn't have a formal oversight body—said the pledge 'has helped create new norms of generosity and grown into a connected and active global learning community." The Charity Reform Initiative report 'raises important questions that aim to encourage greater giving," but the spokesperson said its 'reliance on incomplete data, and its exclusion of significant forms of charitable giving—such as gifts made to foundations and other intermediaries—paints a misleading picture of the impact and intent of Giving Pledge signatories and the spirit and intent of the Giving Pledge." The changes Charity Reform Initiative seeks include renaming the pledge in honor of the late Chuck Feeney—an original signer, who co-founded Duty Free Shoppers Group. Through Atlantic Philanthropies, Feeney's private foundation, the philanthropist gave away his entire fortune of $8 billion over 22 years before he died in 2023. A 'Feeney Giving Pledge," would 'call for Pledgers to pay their fair share of taxes, give money away while alive, and empower organizations led by non-billionaires to solve the urgent problems of our day," the report said. The initiative praises the example of Gates' recent promise to give away most of his wealth and to close his foundation—a total estimated at $200 billion—within 20 years. Also receiving praise is MacKenzie Scott, the former wife of founder Jeff Bezos who has given away more than $19 billion of an original $38 billion settlement she received through her divorce. At the same time, the report calls out billionaires such as venture capitalist Marc Andreessen (who hasn't signed the pledge) for blurring the boundary between his business goals and philanthropy, and Elon Musk (who signed it in 2012) for gifts that primarily offer him tax advantages and anonymity. Andreessen couldn't be reached for comment; Musk didn't respond to a request for comment. The anonymity of Musk's giving occurs because he channels foundation grants through DAFs, which, unlike private foundations, aren't required to disclose grant recipients. Scott is a big user of DAFs too, according to the report, although she keeps a running, detailed list of her donations at Yield Giving, an LLC she set up to manage her philanthropy. The crux of Charity Reform Initiative's argument is that philanthropy in the U.S. is structured to provide the wealthy with generous tax benefits that don't filter through to the individuals and causes in most need of their generosity. According to the group's estimates, about 80% of an estimated $206 billion gifted by the original group of pledgers went first to private foundations. Another $5 billion, the group estimates, probably went to DAFs. But critics of the new report say many wealthy philanthropists use their foundations to make substantive charitable gifts. Though the default has been for wealthy individuals to set up foundations to exist in perpetuity, Bank of America has been facilitating more conversations among those who want to spend down their fortunes when they are alive, according to Dianne Chipps Bailey, national philanthropic strategy executive at Bank of America. Also, a 2024 report from the Donor-Advised Fund Research Collaborative concluded 54% of DAFs granted at least half of their assets to nonprofits within three years. Foundations are required by law to distribute 5% of assets a year to charities, which can include gifts to DAFs. One reason a lot of wealth doesn't reach nonprofits in need isn't about tax structures—it's about donors who lack confidence in their ability to effectively give, Bailey says. A 2023 biennial study from the bank and Indiana University's Lilly Family School of Philanthropy found less than 5% of affluent Americans rate themselves as expert in charitable giving, Bailey says. 'This perception around a lack of confidence is a major barrier." By contrast, the small percentage who do have a philanthropy budget, and monitor the impact of their giving, are more likely to perceive their gifts are having the intended impact and they give more, she says. One way donors are overcoming their lack of confidence is by joining with other philanthropists in giving circles or donor collaboratives such as Women Moving Millions, a group of about 400 that commit to donating $1 million over 10 years to benefit women and girls. Another issue for the Charity Reform Initiative? Of the original U.S. signers of the pledge, 32 who are still billionaires are 283% wealthier since they signed (or 166% wealthier if adjusted for inflation), the report said. The authors argue that most billionaires are unlikely to sign a 'Feeney Giving Pledge," and they make a case for policy change that would ensure that dollars move more quickly out of tax-privileged vehicles to the nonprofits that need funding. They also argue that wealthy individuals should be taxed at 'a fair rate to prevent these fortunes from accumulating in the first place." The Bridgespan Group, which works with wealthy donors and foundations, published research this past November on approaches to philanthropy taken by Giving Pledgers. It found that about half of the 25 'most generous givers" in the U.S. have already donated more than 20% of their wealth, and that the most generous are choosing to use a mix of vehicles to get funding to nonprofits.
Forbes
02-07-2025
- Business
- Forbes
Is This The Boost That Donor Advised Funds Need To Hit Their Stride?
The Donor Advised Fund market is big with an estimated $250 billion held in these consumer-level, tax-advantaged charitable savings accounts, but the industry still needs technological and marketing innovation to realize its potential. Big news in DAF-land was this week's launch of GoFundMe Giving Funds, a virtual space that enables consumers to easily create their own DAFs. 'This new giving tool brings the power of donor-advised funds (DAFs) to a broader audience, eliminating traditional barriers like high minimums and fees,' explained Margaret Richardson, GoFundMe's chief marketing and corporate affairs officer. Margaret Richardson, GoFundMe's chief marketing and corporate affairs officer. More than 200 million people have made $40 billion+ in contributions via the GoFundMe giving platform during the last 15 years. The skills GoFundMe has amassed at moving donors to donate excites Mitch Stein, head of strategy at Chariot, a fintech company focused on DAFs. Awareness of DAFs is the greatest limiting factor in the field's growth, explained Stein who has co-authored two annual studies of the DAF field. 'So now we have a company with a business model solely driven by giving, with phenomenal reach and a consumer marketing engine that's pushing a DAF product,' Stein wrote on Linkedin. 'It's brilliant! And it's helpful for every player in the DAF industry.' Chariot Head of Strategy Mitch Stein Those players include major financial firms like Vanguard, Schwab and Fidelity who each manage billions of dollars in DAF assets. 'My biggest gripe with the DAF market and major providers is that they don't market DAFs to their full client base, and so the utilization is typically below 1%,' wrote Stein. 'The vast majority of people with a brokerage account at these places don't even know what a DAF is! Trust me I ask just about everyone I meet.' Richardson said that initially GoFundMe's major marketing push for Giving Funds will be to its community of 200 million giving platform users via email, and social channels. While it will be free to set up a DAF and give from a DAF, donors can choose to leave an optional tip to help sustain the GoFundMe Giving Fund, the 501(c)(3) nonprofit that powers Giving Funds, she explained. If GoFundMe's Giving Funds initiative is successful it should significantly move the needle when it comes to establishing more DAFs. In addition, the company hopes that online tools it is releasing will move more people than the national DAF averages to actively find and support nonprofits with contributions. Making it easier for DAF holders to donate has been the bread and butter of Chariot since 2023. Traditionally if a consumer was inspired to give from their DAF, they could not simply go to the website of the nonprofit they wanted to support. They had to visit online the financial services company that manages their DAF and fill out forms to make the contribution. This form of 'contribution interruptus' derailed many a gift. To counter this, Chariot markets a DAFpay widget to nonprofits which can integrate it directly into their donations forms thus making it easier for donors to give spontaneously. Making such transactions easier is particularly important because – unlike conventional wisdom that assumed DAFs were only used by the ultrawealthy for major gifts -- 69% of all DAF gifts are less than $1,000, according to the recently released DAF Fundraising Report 2025.
San Francisco Chronicle
30-06-2025
- Business
- San Francisco Chronicle
GoFundMe is refurbishing a little-known financial tool in a bid to supercharge everyday giving
NEW YORK (AP) — GoFundMe CEO Tim Cadogan had some complications while fundraising on his own website last fall. Several friends wanted to help Cadogan reach his $28,000 goal as he crowdfunded for a Los Angeles area wilderness rescue team. But they tried to donate through a lesser-known wealth management tool called a donor-advised fund, or a DAF, a no-frills investing vehicle for money earmarked as eventual charitable gifts. After cutting checks and waiting three weeks, Cadogan said, the money finally arrived. 'It was just a bit of a thing,' he added. "If they were using a Giving Fund, it would take ten seconds.' Giving Funds are GoFundMe's latest in a flurry of product rollouts with the purported goal of moving stagnant U.S. charitable contributions beyond the 2% GDP mark where totals have long hovered. But the for-profit company's DAF, announced Monday, enters a crowded market of more than a thousand providers — products often with older, wealthier clienteles that are often criticized for warehousing gifts. To transform the way that everyday users plan their donations, Cadogan will have to widen the appeal of DAFs beyond the likes of the technology entrepreneur's circles. And he wants to change public perceptions of his company as just a crowdfunding site. 'We're also hopeful that more people will start using GoFundMe for a broader set of things in their lives: not just that one fundraiser they're supporting, not just that one nonprofit. But they're coming in and they're managing their giving portfolio with us and through us,' Cadogan said. 'That connects directly to our mission, which is we want to help people help each other.' A DAF boom — but for whom? Donor-advised funds grew popular over the last decade among ultra-high net worth individuals as a tax-efficient instrument for grantmaking without the hassle of a more sophisticated charitable foundation. Donors can immediately write the contribution off on their taxes but face no deadline for giving the money to a nonprofit. The idea: account holders could invest money they wanted to ultimately donate, let the funds grow tax-free while they sit and give themselves time to identify the recipients best aligned with their giving goals. There's since been a rush to court average givers. Legacy financial services firms such as Fidelity Charitable lowered the minimums to open accounts. Fintech startups such as Daffy contrast their flat fees with the hidden expenses they allege their competitors charge. All that traction brought IRS proposals last year to impose penalties on those who abuse DAFs and Congress has considered legislation that would require some deadlines for disbursements. GoFundMe's Giving Funds will have no minimum balances, zero management fees and donations starting at $5. Users can load their DAF through their bank accounts or direct deposits for free. Credit card payments will be covered through the end of the year and then face the company's standard transaction fee of 2.2% plus 30 cents. Contributions can then be invested in a choice of exchange traded funds from managers including Vanguard, Blackrock and State Street Global Advisors. Cadogan pitches Giving Funds as a way to be more intentional about giving — something he said user feedback suggests more people want. As he sees it, widespread adoption hasn't occurred because DAFs have been framed as 'wealth management products.' 'This is a giving product,' Cadogan said. 'It's something for everybody. And you don't need to know the words 'donor advised fund.' It doesn't show up.' Moving the needle DAFs remain scrutinized for allowing donors to reap tax benefits before they ever redistribute any money to charitable causes — even if the notion that the channel is being exploited is fiercely debated in the nonprofit sector. Opaque disclosure requirements make it difficult to put a number on the overall assets held within the funds. The National Philanthropic Trust placed the total at more than $250 billion in 2023. Cadogan believes GoFundMe's culture is uniquely suited to nudge users with targeted spotlights of the 1.5 million charities already active on the platform. Giving Funds holders will be peppered with information about local nonprofits, crisis responders, their friends' charities of choice and potential beneficiaries that address their selected issue areas. That 'dynamic, alive community' is very different from the 'fairly static, passive' financial vehicles in the current market, according to Cadogan. 'It's essentially inspiring the money to move,' he said. Other features seek to encourage contributions by simplifying things. Users can set annual giving goals by a percentage of their income or a fixed number. Their gifts will tally up in real-time records to track their progress and ease year-end tax planning. Streamlining the process was one area for improvement identified in the DAF Research Collaborative's recent survey of more than 2,100 donors. But Jeff Williams, one of the researchers, said DAFs are currently hitting the 'sweet spot of convenience and connection to nonprofits.' The challenge for any new player, he said, is that it's a competitive environment with many different options. Plus, he added, many DAFs already are 'available-to-everyone vehicles" considering that half run balances under $50,000. 'Givers are voting with their feet that DAFs are increasing with popularity. More options are generally better,' Williams said. 'Anything that makes sure we maintain or enhance the ease of giving, it makes me happier.' But Direct Relief CEO Amy Weaver, previously the CFO at Salesforce, described GoFundMe's entrance as 'a game changer' that could unlock additional funds. Direct Relief, a nonprofit that supplies free medical resources worldwide, reported receiving more than 18,000 DAF gifts totaling $116 million over the past five years. Weaver acknowledged DAFs have been traditionally used by those with more substantial wealth. But she encouraged people to view them as a 'savings account" for "good works." 'And GoFundMe, with its name familiarity and the fact that it really attracts people making smaller gifts, I think could be incredibly powerful if they can bring DAFs to that group of people,' she said. ___
30-06-2025
- Business
GoFundMe is refurbishing financial tool in a bid to supercharge everyday giving
NEW YORK -- GoFundMe CEO Tim Cadogan had some complications while fundraising on his own website last fall. Several friends wanted to help Cadogan reach his $28,000 goal as he crowdfunded for a Los Angeles area wilderness rescue team. But they tried to donate through a lesser-known wealth management tool called a donor-advised fund, or a DAF, a no-frills investing vehicle for money earmarked as eventual charitable gifts. After cutting checks and waiting three weeks, Cadogan said, the money finally arrived. 'It was just a bit of a thing,' he added. "If they were using a Giving Fund, it would take ten seconds.' Giving Funds are GoFundMe's latest in a flurry of product rollouts with the purported goal of moving stagnant U.S. charitable contributions beyond the 2% GDP mark where totals have long hovered. But the for-profit company's DAF, announced Monday, enters a crowded market of more than a thousand providers — products often with older, wealthier clienteles that are often criticized for warehousing gifts. To transform the way that everyday users plan their donations, Cadogan will have to widen the appeal of DAFs beyond the likes of the technology entrepreneur's circles. And he wants to change public perceptions of his company as just a crowdfunding site. 'We're also hopeful that more people will start using GoFundMe for a broader set of things in their lives: not just that one fundraiser they're supporting, not just that one nonprofit. But they're coming in and they're managing their giving portfolio with us and through us,' Cadogan said. 'That connects directly to our mission, which is we want to help people help each other.' Donor-advised funds grew popular over the last decade among ultra-high net worth individuals as a tax-efficient instrument for grantmaking without the hassle of a more sophisticated charitable foundation. Donors can immediately write the contribution off on their taxes but face no deadline for giving the money to a nonprofit. The idea: account holders could invest money they wanted to ultimately donate, let the funds grow tax-free while they sit and give themselves time to identify the recipients best aligned with their giving goals. There's since been a rush to court average givers. Legacy financial services firms such as Fidelity Charitable lowered the minimums to open accounts. Fintech startups such as Daffy contrast their flat fees with the hidden expenses they allege their competitors charge. All that traction brought IRS proposals last year to impose penalties on those who abuse DAFs and Congress has considered legislation that would require some deadlines for disbursements. GoFundMe's Giving Funds will have no minimum balances, zero management fees and donations starting at $5. Users can load their DAF through their bank accounts or direct deposits for free. Credit card payments will be covered through the end of the year and then face the company's standard transaction fee of 2.2% plus 30 cents. Contributions can then be invested in a choice of exchange traded funds from managers including Vanguard, Blackrock and State Street Global Advisors. Cadogan pitches Giving Funds as a way to be more intentional about giving — something he said user feedback suggests more people want. As he sees it, widespread adoption hasn't occurred because DAFs have been framed as 'wealth management products.' 'This is a giving product,' Cadogan said. 'It's something for everybody. And you don't need to know the words 'donor advised fund.' It doesn't show up.' DAFs remain scrutinized for allowing donors to reap tax benefits before they ever redistribute any money to charitable causes — even if the notion that the channel is being exploited is fiercely debated in the nonprofit sector. Opaque disclosure requirements make it difficult to put a number on the overall assets held within the funds. The National Philanthropic Trust placed the total at more than $250 billion in 2023. Cadogan believes GoFundMe's culture is uniquely suited to nudge users with targeted spotlights of the 1.5 million charities already active on the platform. Giving Funds holders will be peppered with information about local nonprofits, crisis responders, their friends' charities of choice and potential beneficiaries that address their selected issue areas. That 'dynamic, alive community' is very different from the 'fairly static, passive' financial vehicles in the current market, according to Cadogan. 'It's essentially inspiring the money to move,' he said. Other features seek to encourage contributions by simplifying things. Users can set annual giving goals by a percentage of their income or a fixed number. Their gifts will tally up in real-time records to track their progress and ease year-end tax planning. Streamlining the process was one area for improvement identified in the DAF Research Collaborative's recent survey of more than 2,100 donors. But Jeff Williams, one of the researchers, said DAFs are currently hitting the 'sweet spot of convenience and connection to nonprofits.' The challenge for any new player, he said, is that it's a competitive environment with many different options. Plus, he added, many DAFs already are 'available-to-everyone vehicles" considering that half run balances under $50,000. 'Givers are voting with their feet that DAFs are increasing with popularity. More options are generally better,' Williams said. 'Anything that makes sure we maintain or enhance the ease of giving, it makes me happier.' But Direct Relief CEO Amy Weaver, previously the CFO at Salesforce, described GoFundMe's entrance as 'a game changer' that could unlock additional funds. Direct Relief, a nonprofit that supplies free medical resources worldwide, reported receiving more than 18,000 DAF gifts totaling $116 million over the past five years. Weaver acknowledged DAFs have been traditionally used by those with more substantial wealth. But she encouraged people to view them as a 'savings account" for "good works." 'And GoFundMe, with its name familiarity and the fact that it really attracts people making smaller gifts, I think could be incredibly powerful if they can bring DAFs to that group of people,' she said.
The Hill
30-06-2025
- Business
- The Hill
GoFundMe is refurbishing a little-known financial tool in a bid to supercharge everyday giving
NEW YORK (AP) — GoFundMe CEO Tim Cadogan had some complications while fundraising on his own website last fall. Several friends wanted to help Cadogan reach his $28,000 goal as he crowdfunded for a Los Angeles area wilderness rescue team. But they tried to donate through a lesser-known wealth management tool called a donor-advised fund, or a DAF, a no-frills investing vehicle for money earmarked as eventual charitable gifts. After cutting checks and waiting three weeks, Cadogan said, the money finally arrived. 'It was just a bit of a thing,' he added. 'If they were using a Giving Fund, it would take ten seconds.' Giving Funds are GoFundMe's latest in a flurry of product rollouts with the purported goal of moving stagnant U.S. charitable contributions beyond the 2% GDP mark where totals have long hovered. But the for-profit company's DAF, announced Monday, enters a crowded market of more than a thousand providers — products often with older, wealthier clienteles that are often criticized for warehousing gifts. To transform the way that everyday users plan their donations, Cadogan will have to widen the appeal of DAFs beyond the likes of the technology entrepreneur's circles. And he wants to change public perceptions of his company as just a crowdfunding site. 'We're also hopeful that more people will start using GoFundMe for a broader set of things in their lives: not just that one fundraiser they're supporting, not just that one nonprofit. But they're coming in and they're managing their giving portfolio with us and through us,' Cadogan said. 'That connects directly to our mission, which is we want to help people help each other.' Donor-advised funds grew popular over the last decade among ultra-high net worth individuals as a tax-efficient instrument for grantmaking without the hassle of a more sophisticated charitable foundation. Donors can immediately write the contribution off on their taxes but face no deadline for giving the money to a nonprofit. The idea: account holders could invest money they wanted to ultimately donate, let the funds grow tax-free while they sit and give themselves time to identify the recipients best aligned with their giving goals. There's since been a rush to court average givers. Legacy financial services firms such as Fidelity Charitable lowered the minimums to open accounts. Fintech startups such as Daffy contrast their flat fees with the hidden expenses they allege their competitors charge. All that traction brought IRS proposals last year to impose penalties on those who abuse DAFs and Congress has considered legislation that would require some deadlines for disbursements. GoFundMe's Giving Funds will have no minimum balances, zero management fees and donations starting at $5. Users can load their DAF through their bank accounts or direct deposits for free. Credit card payments will be covered through the end of the year and then face the company's standard transaction fee of 2.2% plus 30 cents. Contributions can then be invested in a choice of exchange traded funds from managers including Vanguard, Blackrock and State Street Global Advisors. Cadogan pitches Giving Funds as a way to be more intentional about giving — something he said user feedback suggests more people want. As he sees it, widespread adoption hasn't occurred because DAFs have been framed as 'wealth management products.' 'This is a giving product,' Cadogan said. 'It's something for everybody. And you don't need to know the words 'donor advised fund.' It doesn't show up.' DAFs remain scrutinized for allowing donors to reap tax benefits before they ever redistribute any money to charitable causes — even if the notion that the channel is being exploited is fiercely debated in the nonprofit sector. Opaque disclosure requirements make it difficult to put a number on the overall assets held within the funds. The National Philanthropic Trust placed the total at more than $250 billion in 2023. Cadogan believes GoFundMe's culture is uniquely suited to nudge users with targeted spotlights of the 1.5 million charities already active on the platform. Giving Funds holders will be peppered with information about local nonprofits, crisis responders, their friends' charities of choice and potential beneficiaries that address their selected issue areas. That 'dynamic, alive community' is very different from the 'fairly static, passive' financial vehicles in the current market, according to Cadogan. 'It's essentially inspiring the money to move,' he said. Other features seek to encourage contributions by simplifying things. Users can set annual giving goals by a percentage of their income or a fixed number. Their gifts will tally up in real-time records to track their progress and ease year-end tax planning. Streamlining the process was one area for improvement identified in the DAF Research Collaborative's recent survey of more than 2,100 donors. But Jeff Williams, one of the researchers, said DAFs are currently hitting the 'sweet spot of convenience and connection to nonprofits.' The challenge for any new player, he said, is that it's a competitive environment with many different options. Plus, he added, many DAFs already are 'available-to-everyone vehicles' considering that half run balances under $50,000. 'Givers are voting with their feet that DAFs are increasing with popularity. More options are generally better,' Williams said. 'Anything that makes sure we maintain or enhance the ease of giving, it makes me happier.' But Direct Relief CEO Amy Weaver, previously the CFO at Salesforce, described GoFundMe's entrance as 'a game changer' that could unlock additional funds. Direct Relief, a nonprofit that supplies free medical resources worldwide, reported receiving more than 18,000 DAF gifts totaling $116 million over the past five years. Weaver acknowledged DAFs have been traditionally used by those with more substantial wealth. But she encouraged people to view them as a 'savings account' for 'good works.' 'And GoFundMe, with its name familiarity and the fact that it really attracts people making smaller gifts, I think could be incredibly powerful if they can bring DAFs to that group of people,' she said. ___ Associated Press coverage of philanthropy and nonprofits receives support through the AP's collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content. For all of AP's philanthropy coverage, visit
