While the COVID-19 crisis has sparked an uptick in charitable giving, especially from donor-advised funds (DAFs), many charities across the nation, including those on the front lines of virus-related assistance, are struggling to stay afloat. The Foundation for Financial Planning, the Certified Financial Planner Board, Financial Planning Association and the National Association of Personal Financial Advisors have joined forces to urge financial planners to direct clients’ grants from DAFs to U.S. nonprofits during this time.
“Because DAFs afford individuals useful tax and other benefits, many financial planners have appropriately recommended DAFs to clients, often referring to them as ‘charitable savings accounts,’” the organizations said in a statement. “While DAF sponsoring organizations technically have control over funds donated to the accounts, in practice it is the individual donor whose advice to the sponsoring organization prompts money to be released to a specified nonprofit.”
According to the organizations, an average of $3 out of every $4 donated to nonprofits comes from individual donors. And while DAFs have become a very popular vehicle for charitable giving, only $23 billion out of the $37 billion donated to DAFs last year was granted out in donations to nonprofits.
Despite this, the organizations believe financial planners can play a role in getting those donations to nonprofits higher.
“With the COVID-19 crisis forcing nonprofits to cut services and staff or even shut down altogether, the need has never been greater for individuals to direct grants from their DAFs to keep our nation’s social sector afloat. Because most individuals with DAFs are clients of financial planners, we believe planners can play an important role in accelerating the release of these funds from DAFs during a time when U.S. nonprofits are needed more than ever.”
