A Good Source of Money in Hard Times

June 02, 2008

A Good Source of Money in Hard Times

Donor-advised funds are one of the fastest-growing types of philanthropy — now worth about $23-billion, according to The Chronicle’s most recent tally.

But tapping those accounts can be challenging. Donor-advised funds are like charity checking accounts that people set up at financial institutions, community foundations, or other nonprofit organizations. Donors can spend the money in their funds anytime, and they don’t need to tell the government or the public anything about what they do with the money in the funds (or even how much they give.)

Still, the funds offer a good way for careful charities to identify potential donors.

Kim Wright-Violich, president of the Schwab Fund for Charitable Giving, urges charities to keep a record of every gift they receive from a donor-advised fund, even the small ones. People who start donor-advised funds are usually pretty affluent so they probably have more to give, she says. After all, her organization requires donors to give at least $5,000 just to set up a fund, and in the past the minimum was even higher — $10,000.

And donor-advised funds may be especially important to charities if the economy continues to sour. Giving to charities from donor-advised funds grew by 5 percent during the 2002 recession, according to The Chronicle’s survey that year.

“During tough economic times, people are less willing to replenish their own funds, but they direct their funds out because they see the need and they know nonprofits are struggling,” Steven D. Maislin, president of the Greater Houston Community Foundation, told The Chronicle.

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