A Private Foundation View on Recommendations from Our Sector Colleagues
Like many leaders of private foundations, I have strong beliefs about the importance of growing philanthropy in ways that build trust and advance equity in the field.
That is why I am so appreciative of the work that the Strengthening Community Philanthropy Ad Hoc Working Group (the Working Group) has done to recommend changes to the use and management of donor-advised funds (DAFs). The Working Group, which was convened by the Council on Foundations, clearly heard the critics of our field. Their thoughtful recommendations address the core concerns about DAFs while preserving the flexibility that makes DAFs so useful in supporting creative and collaborative philanthropy.
At the Bush Foundation, we partner with community foundations in lots of ways. The ability to contribute to DAFs and direct those funds in partnership with other organizations is a helpful support for community-based giving. We also value how our community foundation partners have grantmaking infrastructure that can handle some grantmaking more efficiently than we can. By partnering with them, we are building shared community grantmaking capacity, which means more philanthropic dollars can get to grantees and the people they serve.
The value of this shared community grantmaking capacity has never been more evident than in meeting the unprecedented challenges of the past two years. The Bush Foundation has been a part of numerous collaborative efforts led by community foundations to aggregate donations and get dollars out to meet urgent needs through equitable, community-based grantmaking processes.
One of the Working Group’s recommendations is specifically related to private foundations. They are suggesting that if a gift contributed to a DAF by a private foundation is counted toward the foundation’s qualifying annual distribution, funds should be advised out within a five-year time window. I endorse this change. I believe it is reasonable to have a time limit to ensure foundations are not using DAFs to get around our annual payout requirements. This change will still allow for trusting and purposeful partnerships while ensuring that resources get out to communities in a timely manner.
The Working Group's other recommendations, like an inactive fund policy and annual distribution requirement, are limited to community foundations. Yet I believe that all foundations should seriously consider and rally behind the recommendations. It is in our shared interest to grow philanthropy, to build trust in philanthropy, and to ensure DAFs can be flexible, effective, and transparent vehicles to address community needs.
I am heartened that these recommendations are built on the real-world experience of foundations and the best available data. In such challenging times, meaningful and practical philanthropic reform is more important than ever. I appreciate the Working Group's community foundation leaders and the Council on Foundations for leading the effort to raise the standards of our field while supporting flexibility to do as much good as possible.
Jen Ford Reedy, President of the Bush Foundation
P.S. To learn more about the recommendations, please consider joining the "Ask the Council" event on Thursday, February 3.