Message to Donors in Today’s Crises: Get Off Your Assets!

With the 2020 election mostly behind us, it’s time to devote our attention—and our philanthropy—to the enormous and intersecting crises facing U.S. communities and the world. Even though the Trump Administration is on its way out, the scourges of racism, inequality, and xenophobia are still alive and well in the United States.

Thanks to our philanthropic partners, Tides mobilized unprecedented levels of funding to protect our democracy this year—over $100 million. Because of the grantmaking of Tides’ Healthy Democracy Fund, I can say with confidence that we achieved our 2020 goal: to expand the electorate by supporting efforts that drove voter turnout of underrepresented communities, especially communities of color and young voters.

As a donor advised fund sponsor and as donors, we need to ask ourselves an urgent question: Why are we saving for a rainy day when we’re in the middle of a deluge?

Now, more than ever, we have to maintain and expand our support for these communities. We can’t let up. The combination of pervasive racial injustice, a surging pandemic, climate change, and an economic depression is devastating low-income people of color across this country. For way too long, progressives have asked the most of our Black and brown friends and neighbors at the voting booth while forgetting about them after Election Day. 

Any one of these issues on its own would be an enormous challenge. Together, they present an historic, once-in-a-lifetime call to action for our leaders—and for all of us. As a donor advised fund sponsor and as donors, we need to ask ourselves an urgent question: Why are we saving for a rainy day when we’re in the middle of a deluge?

Put simply, it’s time to Get Off Your Assets.

Astounding Growth in Donor Advised Funds

According to the National Philanthropic Trust, charitable assets held in donor advised funds in the United States currently total $121.42 billion. That’s money that could be deployed right now to fuel real and lasting change on issues from poverty and injustice to education, healthcare, and the environment.

Even without a payout requirement, at Tides we are fortunate to work with activist funders who are rising to the challenges we face. Our aggregate annual DAF payout rate exceeds 80%.

But all too often, the money in donor advised funds just sits there. While private foundations are required to give five percent of their assets every year, there is no such requirement for donor advised funds. In fact, managing these growing fund balances has become a huge business for firms like Fidelity Charitable and Schwab Charitable, where these accounts have exploded (both in number and assets) in recent years. This is thanks in part to the 2017 tax bill and the incentives it created for wealthy individuals and families to create donor advised funds. Even without a payout requirement, at Tides we are fortunate to work with activist funders who are rising to the challenges we face. Our aggregate annual DAF payout rate exceeds 80%.

Unfortunately, some in the donor advised fund space seem to be as focused on growth of assets under management as they are on annual grants made or social impact achieved. As Tides Founder Drummond Pike recently wrote, “A charity should be judged by what it does, the programs it supports, and the grants it makes, not by how much it manages.” We agree. 

Given the privileged treatment of donor advised funds under the law, it’s imperative for fund holders to commit to moving these monies for social good, particularly at a time when so many crises demand action. A good place to start is to sign onto the Crisis Charitable Commitment, which was initiated by the WhyNot Initiative to spur private foundations and donor advised funds to give more to organizations on the front lines fighting for racial justice and democracy. The commitment asks donor advised fund holders to contribute the greater of $100,000 or 10 percent of their fund balances during 2020. In a related campaign, Emergency Charity Stimulus, the advocacy group Patriotic Millionaires is asking Congress to mandate higher payouts for private foundations and donor advised funds during this crisis moment.

Moving Money Fast—with Tides

Regardless of exact payout requirements or goals, Tides makes it easy for donors—like you—to create donor advised funds, make grants, and maximize your impact on important causes that resonate with our values. For example, grants from Tides donor advised funds aren’t limited to 501(c)(3) organizations. Tides can direct funds to support charitable activities of 501(c)(4) organizations, social enterprises, international NGOs, and mission-related investments. As a mission-driven public foundation, we also have launched numerous grantmaking initiatives focused on accelerating social change in areas from racial justice and democracy to climate and pandemic response. 

At Tides, we can help you envision the change you want to see in the world and direct your donor advised fund resources to changemakers leading transformative work on the ground.

The bottom line: At Tides, we can help you envision the change you want to see in the world and direct your donor advised fund resources to changemakers leading transformative work on the ground. At the same time, we have a grantee centered approach to philanthropy. We encourage general operating support grants and keep it as easy as possible for grantees to focus on their work. We strive to move money efficiently—so these organizations and movements have what they need to respond to today’s crises now. 

Please contact Tides today to learn how you can “Get Off Your Assets.” Together we can help communities weather this time of crisis and build a brighter, more just, and more prosperous future.