Giving Compass' Take:

• Ben Paynter explores the controversy surrounding the Silicon Valley Community Foundation, which uses loosely regulated donor-advised funds.

• Should donor-advised funds be more strictly regulated? What are the benefits of donor-advised funds? 

• Read a defense of donor-advised funds. 

In late July, the Institute for Policy Studies warned that one of the fastest growing ways of giving to charity could be manipulated to benefit super-rich donors instead of those most in need.

The charitable vehicle in question is called a donor-advised fund (DAF), which allows donors to give money and non-cash assets, including public stock, to charity to receive an immediate tax benefit, but then wait to distribute the money. It’s a clever incentive that’s particularly en vogue among the 1%, in part because it allows for contributions of non-cash assets, such as stock, private company shares, and real estate, to avoid capital gains tax.

The issue is that there isn’t any formal timetable for that money to flow back out again, or necessary guidance on how particularly large sums might effectively be spent. Both issues appear to affect the Silicon Valley Community Foundation, a $13.5 billion cause fund that has received donations from Mark Zuckerberg, among other tech elite. The group recently removed its CEO, and others have questioned if it is more focused on growing funds inside DAFs than on accomplishing its supposedly community-driven goal.

Read the full article about the Silicon Valley Community Foundation by Ben Paynter at FastCompany.