Fidelity Jumps to Number 1 in the Philanthropy 400

The Philanthropy 400 is the Chronicle of Philanthropy’s annual ranking of charities based on private fundraising.   This year, for the first time, the Fidelity Charitable Gift Fund was ranked first, bypassing the United Way, in private fundraising.   According to the Chronicle, it marks “the first time an organization that primarily raises money for donor-advised funds has held the top spot.”    Author’s aside:  Given the growing popularity of DAFs, wouldn’t it be super if we had some regs?  Just sayin’…

I happened to teach DAFs this morning in my Nonprofits class, right after having done a fairly comprehensive unit on the private foundation excise taxes.   It is only after one understands the complexity and burden of Chapter 42 (even after the 2006 PPA changes) can one appreciate the simplicity of the DAFs.    We went through a sample DAF agreement from a well-known community foundation, reviewing the restrictions on distributions and the private cy pres power.   Even with these limitations, my class seemed pretty convinced that as compared to a private foundation, the DAF is the way to go.   Happily from a teaching perspective, they were able to identify the private benefit issue with the commercial providers pretty quickly, although I had few answers on why the IRS didn’t originally see it as an issue and continue not to do so.

In any event, the Chronicle has a pro/con opinion section in front of its pay-only firewall, which can be found here (pro) by Howard Husock of the Manhattan Institute and here (con) by Ray Madoff of Boston College.    Husock’s article teases a forthcoming report by the Manhattan Foundation on donor advised fund fees and spending, which the Chronicle article says will be released this month, so more to come on that.   While we wait, I think that Husock’s answer to the private benefit issue is somewhat weak (“they have to be managed by someone, so why not Fidelity?’ seems disingenous) but I do think that he does a better job addressing some of Prof. Madoff’s DAF distribution issues.  

You know what else would address some of these issues?  Regulations.    Just sayin’.

EWW