Donor-advised funds (DAFs) have grown significantly in recent years. In 2018, DAFs reached new highs in four key metrics: dollars distributed from DAFs to charitable organizations, dollars contributed by donors to DAFs, the value of charitable assets under management in DAFs, and the number of individual DAF accounts.

As DAFs have reached new highs across these measures, the debates surrounding them have reached new volumes as well. Proponents of DAFs highlight that these vehicles have made giving easier and allow donors the time to think through their giving decisions. Critics, on the other hand, argue that DAFs are not transparent enough and delay nonprofits from getting donations. Some of these critics call for reforms such as changing the tax rules related to DAFs, requiring DAFs to distribute their funds within a set timeframe or to pay out a minimum percentage of their assets annually, and increasing the transparency of these accounts.

Across many of these debates, however, there is one crucial voice that is missing: the nonprofit perspective.

To bring these voices into the conversation, CEP surveyed our Grantee Voice panel of CEOs from nonprofit, grant-seeking organizations.

We asked nonprofit CEOs whose organizations have received funding through DAFs at different types of sponsoring organizations if they have a preference between them. Most (80 percent) indicate that they do not have a preference, but among the 20 percent who do, almost all prefer community foundations.

The top advantage that nonprofit CEOs cite (22 percent) is that DAFs involve less of an administrative burden for nonprofits.

The top disadvantage that nonprofit CEOs cite (44 percent) is that DAFs hamper nonprofits’ ability to build personal relationships with donors.

In their responses to a broad question about what they think of the debates surrounding DAFs, nonprofit CEOs mention more cons of DAFs than pros.

Among those who mention cons, almost half (47 percent) say that DAFs delay nonprofits from getting donations; 26 percent say that DAFs hamper nonprofits’ ability to build personal relationships with donors; and 24 percent say that DAFs are not transparent enough.

Read the full article about donor-advised funds by Hannah Martin at the Center for Effective Philanthropy.