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The end of the year is just a few weeks away, but there is still time to be strategic about your giving.
This year seems to have passed at an entirely different pace. Days and months under lockdown still drag on endlessly, yet the year has flown by. All of a sudden here we are with just a few weeks to go until the new year starts.
As we all know, Dec. 31 is not just the end of the year. It’s the end of the tax year, the date by which most individuals and foundations must make their charitable donations in order to claim deductions on their tax returns. Some high-capacity philanthropists choose to leverage the strengths of donor-advised funds (DAF) to house capital earmarked for charitable contributions. After all, DAFs offer a solution for busy individuals who haven’t had time to figure out where, or how, to direct their philanthropic capital. They take the tax deduction and the DAF grow in value, ready for disbursement when the right giving opportunity arose.
While there are distinct advantages to DAFs, unfortunately, things haven’t always worked as originally intended. Fund managers have been watching DAF balances grow, and too much philanthropic capital is still sitting on the sidelines. This is precisely why DAFs have come under criticism this year: in a time when nonprofits and communities are in urgent need of charitable funds, not enough is being made available to the nonprofit sector, even though DAF assets have been earmarked for this very purpose.
While there has been some movement and even a campaign to motivate giving from capital held in DAFs, there remains over $100 billion locked inside these funds. Nonprofits, which have been lifting heavy under the weight of the pandemic, could be putting them to use.
The great news for philanthropists is that there are still ways to be strategic with your capital, even at the last minute.
- The Center for Strategic Philanthropy has curated and vetted nonprofits and research institutions which have been working nonstop to keep pace with community needs, and others looking to create long-term systems change.
- Giving Compass has a list of COVID-19 funds, with an emphasis on community foundations. Community foundations are an important resource for any philanthropist, providing on-the-ground knowledge of what is needed to meet immediate and long-term needs.
- The nonprofits you already support likely need an infusion of extra capital since their usual methods of fundraising were severely impacted this year.
COVID-19 shed a glaring light on society’s broken systems. Our TV screens and news feeds are still inundated with stories and pictures showing nonprofits and social justice organizations working to meet community demand for food security, financial assistance, housing, health care, and more. The scientific community has taken a hit too, with lab closures and layoffs which will mean stalled progress for the other so far incurable diseases millions of us endure.
These organizations need immediate, flexible financial assistance, and will for some time. The capital is there. As this year comes to an end, reconsider the usual approaches, and start to think ahead to what your philanthropy in 2021 will look like. As the pandemic rages on in the new year there will be emergency economic and medical needs, urgent needs to ensure equitable distribution of the vaccine, and long-term efforts to reimagine and rebuild our societal systems.
COVID’s cruel aftermath will be here for quite some time, even with a vaccine in sight, it will take time and effort to rebuild. Philanthropy has been one of the brighter spots in a year that will be remembered for its darkness. As we prepare to ring in a new year, there is still time to make sure philanthropy is meeting the challenge that is COVID-19 head on.