The Unbearable Lightness of Donor-Advised Funds

BY JAN MASAOKA

Why are nonprofit folks so emotional and angry about not being able to make their case (or even apply) to the $250 billion stored in U.S. donor-advised funds?

Let me tell you a story.

I met an African American woman, let’s call her Grace, who founded and runs a nonprofit organization in the heart of the city. Many years ago, Grace found out the hard way that when a woman leaves prison, she can’t get her children back unless they have a permanent address.

Based on her own experience, she founded a nonprofit to house recently incarcerated women – giving them a permanent address where their children could join them. Grace knew firsthand that women can hardly think about anything else until they have their children back.

Starting from scratch, she worked tirelessly and brilliantly making the case and scrounging everywhere for resources. Decades later, Grace’s scrappy and enterprising nonprofit grew to provide houses with safe, stable housing for 18 women and 30-40 children at a time. An impressive, but precarious, community service, and like many charitable enterprises, constantly dealing with the need to bring in funds from a shifting set of players in charge of grants and contracts. Nevertheless, years of satisfying government and foundation funders still didn’t dent Grace’s dream for her community quest.

“The local community foundation has over a billion dollars, but I can’t even get an appointment with them. They keep saying all their money is in donor-advised funds so I have to get to know the donors.”

If you take a moment to put yourself in Grace’s shoes: you are scrapping and struggling to help desperate women in dire conditions. Right next door is a golden castle, proclaiming that it’s there to help the community. How does that feel?