I had dinner recently (yes, in-person, face-to-face!) with a husband and wife who asked me a very basic question; “So what does The Catholic Foundation do?” As I went through the litany of ways that the Foundation supports our Catholic faith throughout the Diocese of Columbus, I said something that caught their attention. “Many donors use a donor advised fund to manage their charitable giving.”
I continued, explaining that a donor advised fund (DAF) is in essence a charitable checking account in which the donor makes a tax-deductible gift(s) to, all the while retaining the ability to advise the Foundation when and where to send charitable contributions. I said, “think of it like a health savings account for charity.” The DAF ends up being a one-stop-shop for sending charitable gifts to parishes, alma maters, social service organizations, local elementary and high schools, and even charities in a hometown outside of Ohio.
Donor advised funds have been around since the 1930’s but it wasn’t until the last ten or fifteen years that they have really taken off in popularity. The Catholic Foundation’s first DAF wasn’t created until 1992, but we have seen an explosion of growth of funds since then. A DAF’s flexibility and tax incentives, coupled with donor input on investment options and distributions, has led to the creation of more than 400 funds to date.
According to the National Philanthropic Trust, there was a 22% increase in donor advised funds opened from 2018 to 2019. This fiscal year alone (June, 2020 – July 2021), Foundation donors have used their donor advised funds to send 1,800 organizations a total of $6,255,000. From the Bishop’s Annual Appeal to capital campaigns for local high schools, donors have found that using a DAF is a simple and convenient way to manage their giving.
As I explained to the couple, the joy of the donor advised fund is that it is so flexible that it can be used by more than just couples or families.
- Nonprofit organizations have created DAFs to help streamline their donor support, directing donor gifts into the DAF in aid of their missions.
- Numerous Knights of Columbus Councils have created their own DAFs to provide a centralized location to invest their resources.
- This year, a donor created a DAF with the sole purpose of supporting the needs of the Youth Ministry program at a local parish.
- Years ago, a husband created a DAF and secretly funded it until his wife’s retirement. Her retirement gift was the fund with a significant amount of money that she could then send to her favorite Catholic causes.
- Just last week we opened a new DAF for a family whose father passed away. The fund will be used to collect memorial contributions and then the family will distribute the proceeds to charities in dad’s name.
In my mind, the husband and wife were completely enthralled with my description of the DAF. In reality, they may have just been really enjoying the Villa Nova pizza, but they were intrigued! “I assume to start one of those funds we need a lot of money” the husband bristled. “To the contrary”, I shared, “donor advised funds can be created with a gift of any size, even $10 will do.” He clearly wasn’t expecting that answer.
I also shared that unlike other local organizations and foundations, The Catholic Foundation invests donor’s gifts to be in alignment with Catholic teachings: something that you can’t find elsewhere.
The couple liked what they heard and saw a real value in having their own DAF. We completed the simple paperwork in one day and the
fund was quickly up and running and has already sent their first gift to their parish.
If you would like more information or want to discuss a donor advised fund, I would welcome a conversation. Feel free to contact me by email at email@example.com or by phone at 614-443-8893.