What the heck is a Donor Advised Fund and why should I care?

checkbook
02.19.2014By

If you’re like most nonprofits, you’ve probably never heard of a DAF (donor advised fund). But you do know how the Internet has changed everything about how people give money to nonprofits.

The internet has changed how people research causes, stay in touch with their favorite nonprofits, and donate to nonprofits.

Donor Advised Funds, like the Razoo Foundation, are allowing anyone access to information about charities they support. DAFs are accounts owned by a public charity, that allows donors the ability to advise how funds are spent.

Traditionally, community foundations have been the home of DAFs, In fact, the Jewish Community Fund, created in 1972, was the very first DAF.

In 1987, a United States ruling said that the IRS needs to recognize a public charity (National Foundation) as tax-exempt, even though they promoted DAFs, paid commissions to individuals referring donors, and considered donor recommendations when making awards.

This ruling caused an explosions of DAFs, allowing philanthropy opportunities that were previously reserved for the affluent.

In 2010, the Razoo Foundation was launched as a public charity, and has used DAFs in a unique way:

Razoo Foundation disburses all funds it receives to qualified charities, typically within 30 days. In 2012, the average time between Razoo Foundation receiving a donation and a charity receiving those funds from Razoo Foundation was 26.72 days.

Razoo Foundation’s support of Giving Days is an example of democratized philanthropy in action. Through regional and national Giving Days, Razoo Foundation is helping empower small charities to increase their funding, reach new supporters, and build their capacity.