Should I be giving now or is it OK to give later?
During the crush of the pandemic, we began to hear heartfelt cries for private foundations and donor advised step up their distribution of dollars to working charities.
This came in the form of campaigns to encourage DAF donors and foundations to voluntarily accelerate giving, along with calls for legislation that would temporarily double mandatory payout rates from 5% to 10% for private foundations and add the same 10% minimum payout for every individual DAF account. A separate proposal calls for requiring DAF contributions to be fully disbursed within a 15-year window.
While we are hopefully past the worst of the pandemic, the calls for reform are still strong.
The underlying theme is that urgent needs dictate an immediate increase in payouts. After all, what good is it to anyone to have all those charitable dollars sitting unused?
At issue is an age-old debate: is it better to give now or is it OK to give later?
Give Now or Give Later?
The “give now” crowd says that current needs justify the current gift. It presumes that future needs will take care of themselves.
David Kass, vice president for government affairs at the Council on Foundations said in the group’s November 2020 public policy summit that requiring higher payouts “will hurt philanthropy’s ability to respond to the next crisis. As terrible as this one is, we know there’s going to be another one.”
In another argument for the wisdom of reserving philanthropic funds for the future, an article in the Fall 2020 Stanford Social Innovation Review argues that “…the lives of future beneficiaries are no less valuable than present ones” (Are Donor Advised Funds Good for Nonprofits?).
“…the lives of future beneficiaries are no less valuable than present ones.”
The authors of the SSIR article further point out how donors may have good reason to defer or postpone grants:
- From a donor perspective, some donors are new to philanthropy and the idea of being forced to make immediate decisions may lead to uninformed or bad decisions. Given time to decide, the donor may make better decisions leading to greater social good.
- A donor may further wish to delay for cause effectiveness—for instance in the COVID-19 era that may mean funding for a homeless shelter vs. funding for more efficient delivery system for future vaccines. Both are needed but only one is urgent.
- A donor may wish to delay for legacy or family reasons. Instilling philanthropic values in children or grandchildren is perhaps one of the greatest ways to impact on our world on an ongoing basis. Training future generations to contribute to the world can be equally positive.
- From a nonprofit perspective, we have equally seen the dangers of dumping charitable dollars on nonprofits ill-equipped to handle an infusion of capital. Waste is not a desired outcome either.
Where do you land in this discussion?
For my part, I don’t think it’s as simple as some might think. Wise and strategic giving is a combination of meeting immediate needs but also thinking ahead to needs that will exist in the future. Saving for the future is a good idea, and also addressing future needs through proactive measures.
Photo by Josh Appel on Unsplash
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Published March 6, 2021