Donor-advised funds (DAFs) are a topic of keen interest to nonprofits. When CalNonprofits conducted a survey recently, 424 nonprofits were quick to respond — discussing their own experiences with DAFs as well as their views on possible DAF regulations. And we are pleased to announce a new bill on DAFs - AB 1712 - co-sponsored by CalNonprofits, NextGen California, and philanthropist Kat Taylor.

AB 1712 is authored by Assemblymember Buffy Wicks: “I introduced AB 1712 because we must ensure that tax incentives meant to encourage charitable contributions are being used as they were intended: to directly benefit the people and causes of service providers. They should not be used as a vehicle to benefit a few wealthy individuals, while depriving the general public of the benefits that result from direct gifts to charitable service providers,” she said.

“I want to bring stakeholders together so we can explore options to increase transparency. Let’s move to bring more sunlight to DAFs and unlock these much-needed funds by passing AB 1712."

Enormous changes in the field of donor-advised funds have reshaped the field far beyond how nonprofits have long understood it. For many nonprofits, DAFs are most closely associated with community foundations. And in fact, in 2016 (most recently available data), there are 195 community foundations based in California holding $14.44 billion in assets. But the commercially affiliated funds such as Fidelity and Vanguard have far surpassed the community foundations in recent years, and Fidelity Charitable now has more assets than any other nonprofit in the U.S. Here in California, just one such fund — Schwab Charitable Fund — holds more than $8 billion in assets. Click here to learn more about donor-advised funds.

With this legislation we are highlighting two important public policy aspects of donor-advised funds:

First, there is no time requirement for any funds to be distributed out of the DAF to nonprofits. Donors receive an immediate tax deduction for donations into DAFs — an expense to the public — but the funds can be used for public benefit (given to nonprofits) anytime whether the subsequent week or in 100 (or more) years.

Second, DAF sponsors (whether a commercially affiliated fund or a community foundation) can make anonymous gifts to nonprofits without reporting any activity for individual funds. An unintended consequence of these aspects has made DAFs attractive vehicles for dark money, where huge gifts to 501c4s — including partisan political organizations — can be made without being traceable to the donor.

California nonprofits are familiar with donor-advised funds, with more than 70% of survey respondents saying they had received a donation within the last year from either a commercial fund or a community foundation. And, they are highly interested in seeing changes in several DAF areas:

Kat Taylor, impact investor and DAF holder, strongly endorsed AB 1712, saying, "As owners of donor-advised funds ourselves, we adhere to best practices to ensure the funds get out into the community. We are also committed to working with Assemblymember Wicks, our nonprofit allies, and other stakeholders to explore better reporting and transparency options.

And CalNonprofits CEO Jan Masaoka adds, "DAFs have an important role to play for donors and for nonprofits. It’s time for regulation to start catching up with the rapid, technology-driven changes in DAFs."

We’ll be updating you as the DAF bill evolves and moves through the California legislature. If you are not already receiving our eAlerts, click here to subscribe. And we welcome your perspectives, comments, and questions on the DAF bill below. 

California’s new governor has promised big changes for our state, both when he was on the campaign trail and in his first proposed budget. Now that 100 days have passed, what are Governor Newsom’s top priorities? What has he already been able to jump-start? And what isn’t getting addressed?

Join CalNonprofits and our partners from California Philanthropy and the League of California Community Foundations for a fast-paced California Policy Forum webinar:

Wednesday, April 10th
11 AM to 12 PM
FREE
Register here

Webinar Panelists

		Karthik Ramakrishnan, Professor of Public Policy and Political Science @University of California, Riverside Karthick is founding director of the Center for Social Innovation and a Board Member of The California Endowment, and Chair of the California Commission on APIA Affairs. He directs the National Asian American Survey and is the founder of AAPIData.com, which publishes demographic data and policy research on Asian Americans and Pacific Islanders. He has published many articles and 6 books, including most recently, Framing Immigrants (Russell Sage, 2016) and The New Immigration Federalism (Cambridge, 2015), and has written dozens of op-eds and appeared in over 1,000 news stories.
		Christopher Martin, Legislative Advocate - Homelessness at Housing California Christopher Martin is the legislative advocate with a focus on California homelessness policy for Housing California and he serves on the Executive Steering Committee at the Board of State and Community Corrections (BSCC) for the Adult Reentry Program. Christopher has worked in the State Capitols of Illinois and Michigan, and the U.S. Capitol in Washington D.C. While in D.C., Christopher worked for then-Rep. Tammy Duckworth to secure funding for homeless veteran care for various non-governmental organizations in Illinois and around the country.
		Chris Hoene, Executive Director at California Budget & Policy Center Chris Hoene became the Budget Center’s executive director in October 2012, bringing to the organization 15 years of leadership in state and local policy and analysis. Prior to joining the Budget Center, Chris was director of the Center for Research and Innovation at the National League of Cities in Washington, DC, leading efforts to analyze trends in local and state government and promote constructive policy action on issues including public finance, economic development, housing, poverty reduction, infrastructure, and governance.

If Congress and the White House don’t reach an agreement by February 15, 2019, the federal government will shut down again, inflicting more and lasting harm on our communities and nonprofits. We know how much the recent shutdown hurt because nonprofits across the state shared their stories and worries, and we sent those compelling stories to all the California members of Congress. 

Now our representatives in Washington D.C. need to hear from all of us directly. Our members of the House of Representatives and our Senators need to hear the local impact of the recent shutdown, and we nonprofits can do that best. Tell them about the people in your community losing their housing or jobs, or the loan your organization needed to cover payroll, furloughed federal workers coming to food banks, and what happens if they shut down the government again.

Even if you know your representatives are committed to ending the shutdown, it's important to let them know that their community is watching and supporting their efforts. Increasing the pressure on federal officials is the best way to prevent another senseless shutdown.