Survey: Donors Urge Charities to Use Donations Promptly, Not Stash Cash

By Steve Rabey
money cash donations
A new survey shows donors want charitable foundations and Donor Advised Funds to put their donations to work rather than stashing funds. (Photo: Vladimir Solomianyi / Unsplash / creative commons)

Political partisanship is a powerful dividing line, but a new survey shows widespread agreement on the need for changes in how quickly charitable foundations and donor advised funds (DAFs) put donations to work.

Current law gives donors to foundations and DAFs tax breaks today for gifts that may not be forwarded to working charities for years, if ever. Both conservatives and liberals want to stop “subsidizing the wealthy” by decreasing the time that funds can be parked.

“Survey respondents across the political spectrum expressed intense support for moving the money sooner rather than later,” according to the survey conducted by research firm Ipsos for the Institute for Policy Studies, which advocates for change through its Charity Reform Initiative. “Americans want a relatively quick return, with a relatively short timeline for grant-making.”

Respondents were supportive of the important role charitable foundations play (82%). The Institute for Policy Studies is a progressive think tank founded in 1963 by two members of the Kennedy administration, but it found broad support for charitable reform across the political landscape. 

The survey found that 90% of conservatives/Republicans and 80% of liberals/Democrats “feel it is not right for taxpayers to subsidize the wealthy to set up permanent foundations and grant donations as they choose.”

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“Respondents across the political spectrum expressed a strong discomfort with taxpayer subsidies allowing donors to set up perpetual foundations, with conservatives objecting to such subsidies even more strongly than liberals.”

The survey of over 1,000 adults found that 82% of respondents “support the important role that charitable foundations play,” but many were not aware that “one-third of all charitable donations accumulates in private foundations and DAFs.” After being told that “more than $1.2 trillion in charitable contributions (are) currently sitting on the sidelines,” respondents expressed their disapproval and supported reforms.

“A broad, bipartisan majority wants donors who are receiving preferable tax treatment for their charitable contributions to move funds quickly to active charities on the ground,” said the survey.

The survey found that people want foundations and DAFs to move more funds more quickly to charities that can put it to work:

  • 69% said Congress should pass legislation requiring 10% payout requirement for foundations (up from the current 5%) and for DAFs — the current tax code does not require DAF donors to make any payouts at any time — even if this reduces the amount of money in foundations and DAFs in the future.

  • 73% support requiring DAFs to make grants within 2 to 5 years of receiving donations, while 25% say no timeline should be applied. Half want DAFs to grant money to charities within two years, while 22% favor two years, and 25% said DAFs should “take as long as they want” to distribute funds to charities.

A majority of respondents (64%) expressed concern about working charities facing challenges, such as more strain on limited resources and rising costs due to inflation. 

Ministry Watch has reported on the growing popularity of foundations and DAFs and on legislative efforts to change the rules. In June 2021, the Accelerating Charitable Efforts Act was introduced by senators Angus King and Chuck Grassley. The bill seeks to speed up the process of DAFs granting funds to charities and would require DAFs to pay taxes on funds that aren’t distributed as required. The bill was referred to the Senate Committee on Finance, which has not yet moved it forward. 

This article originally appeared at MinistryWatch.

Steve RabeySteve Rabey is a veteran author and journalist who has published more than 50 books and 2,000 articles about religion, spirituality, and culture. He was an instructor at Fuller and Denver seminaries and the U.S. Air Force Academy.

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4 thoughts on “Survey: Donors Urge Charities to Use Donations Promptly, Not Stash Cash”

  1. Couple more thoughts since this article is full of misinformation and whether intentional or not, innuendo.

    3 points based on the quotes below.

    1. “changes in how quickly charitable foundations and donor advised funds (DAFs) put donations to work.”

    This assumes a gross misunderstanding of how DAF and the Foundations that use them work. DAFs are almost exclusively individuals.

    These are NOT charities that collect money from others. The same with the majority of family run trusts and foundations.

    The statement also clouds what it means to “put the money to work”

    Money invest is working money.

    There are 3 things you can do with money.

    Waste it.
    Spend it.
    Make it work for you.

    DAFs put the money to “work” from day one. There isn’t an option to “take it back” for personal use. Once it’s in the fund it will go to a charity.

    2. “Current law gives donors to foundations and DAFs tax breaks today for gifts that may not be forwarded to working charities for years, if ever.”

    This assumes that the money is still accessible to the donor. DAFs are a way to donate tax free donations that are recognized once. Off of the initial amount.

    They do not continue to collect tax benefits in future years no matter how fast or slow the money is distributed.

    3. “Americans want a relatively quick return, with a relatively short timeline for grant-making.”

    This is because we are uninformed, impatient and uneducated, and why so many of our financial lives (including ministries and NFPs) are broke and in such a mess.

  2. At the very least and independent annual order should be done on these institutions and people – So the money isn’t not forgotten about!

  3. Jim,

    You are mixing apples with basketballs.

    Whether Samaritans Purse is right or wrong for being good stewards is irrelevant to a dialogue on DAF which are private trusts from individual donors who direct where their own personal money is given.

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