Pete’s Perspectives: The Virtues of Donor-Advised Funds in the Time of COVID-19
On December 30, 1960, Syracuse residents Gil and Letty Murray created the first donor-advised fund at the Central New York Community Foundation – the H. Gillis and Letty M. Murray Fund – using the cash balance of a paid-up life insurance policy. The Community Foundation is 93 years old this year and for 60 of those years, we have been administering these flexible tools for giving.
Donor-advised funds are charitable giving accounts that allow donors to make grants to a wide variety of causes as their interests evolve over time. Fundholders are able to connect with the philanthropic expertise of the Community Foundation, retain discretion and confidentiality, while avoiding the administrative burdens of private foundations. This offering is a core service of the Community Foundation, enabling us to engage with charitably inclined local residents and generate more philanthropy for our region – with the end result being that charitable capital is retained here rather than being transferred elsewhere.
Donor-advised funds, for their part, have gained prominence and popularity, as well as some detractors, in recent years. Our experience, particularly over the last six months, proves up the value of donor-advised funds for our community. At a time of acute nonprofit distress, a pandemic-induced economic crisis, and a long-overdue reckoning on the impacts of generations of systemic racism, our donors have risen to the challenge. So far this year, grants or transfers from donor-advised funds to support our grantmaking and strategic initiatives increased by 67% compared to 2019 and more than doubled since 2018. Similarly, the average size of each grant has doubled from 2018 to 2020, from $3,900 to $7,800. The grant payout rate from our donor-advised funds in only the last six months is more than 50% higher than a typical private foundation might undertake in any given calendar year.
|(January-June)||#Grants and Transfers to CNYCF Initiatives||$ Value of Grants and Transfers from DAFs||$ Increase||% Increase/Year|
We have heard of similar stories from community foundations across the country – there have been record grant distributions from donor-advised funds to meet the moment. According to a survey by the Community Foundation Public Awareness Initiative (CFPAI), donor-advised fund grantmaking at 32 foundations was up more than 80 percent in March-May of this year compared with the same period one year ago. This increased support translates to hundreds of millions of dollars in grant funding to communities. An earlier, larger survey by CFPAI found that donor-advised grantmaking at community foundations increased by more than $300 million in March and April alone.
As we saw here in Central New York, donors across the country have granted two or three times more than they have in previous years in response to recent events. Most frequently, their support went towards general operating support for local nonprofits and the communities they serve. The work of engaging donors, stewarding their gifts for local impact, and creating endowed funds to sustain support for communities is core to the DNA of community foundations across the country.
For a philanthropically under-endowed community like Syracuse, donor-advised funds are a valuable tool for amplifying giving by local residents and ultimately creating positive community change. Today, about one-third of the Community Foundation’s assets are held in donor-advised funds. Our remaining funds are split between broadly purposed Community Funds and more restricted endowments, such as designated and scholarship funds.
Gil Murray passed away in 2007. Laetitia ‘Letty’ Meachem Murray, passed at age 99 just last year. The Community Foundation was honored to have had a relationship with the Murrays that spanned almost six decades. Today, their fund continues on, to support the greatest needs and challenges of our times as an endowed Community Fund, providing grants to local organizations and support for our key strategic initiatives. The Murrays are a testament to long-term thinking demonstrating real impact in the present. The donor-advised fund was the charitable vehicle that made their impact possible.
Recently, we celebrated some our fundholders who chose to give during this trying time. Click on the names to see what they said about giving during a crisis and their hopes for the future of Central New York. We interviewed Steve and Elaine Jacobs, Andy Breuer, The Waldmans, Bob & Toni Salisbury and The Borers.