Give Smart Blog

Donor-Advised Funds: New Reform Proposal

A donor-advised fund is like a charitable investment account, for the sole purpose of supporting charitable organizations you care about.  Donor advised funds allow you (and others you choose) to recommend grants to a variety of charitable causes. Each year, you can identify new causes to support or continue to be involved with charities you’ve supported in the past. Donor advised funds are the best option for donors who like to take a hands-on approach to giving or who want to involve the whole family in decisions about giving.

Arkansas Community Foundation opposes payout requirements of DAFs, as does the Council on Foundations. Individuals who utilize Donor Advised Funds are already distributing far more than the 5% that is required of ultra wealthy donors who utilize a private foundation for their philanthropy. In fact, we keep close tabs on our statistics here at the Community Foundation and our current payout rate for non-endowed funds is over 14%. 

With regard to the proposed requirement of disbursing funds within 15 years, we consider this requirement unnecessary. Many community foundations, including Arkansas Community Foundation, have much stricter internal policies. Here at the Foundation we require all funds to disburse grants every 36 months at minimum.

And finally, disbursements from DAFs at Arkansas Community Foundation continue to grow, significantly, year over year.  We saw an increase of 17.5% (+$5,879,956) in grant distributions from DAFs in 2020 over 2019.

For more information about this topic the Council on Foundations has created a comprehensive issue paper to help guide you.

You can also download this one-pager to learn more about establishing a donor advised fund at Arkansas Community Foundation and read more about the benefits of creating a donor advised fund.