We’re digging deeper into the roles of donor advised funds (DAFs) at community foundations, sharing examples of DAFs in action around the state to learn more about their role in communities.
We recently spoke to Jonse Young, director of philanthropic services at the Grand Rapids Community Foundation (GRCF), who leads the philanthropic services team managing the relationship between DAF holders and the community foundation.
Of the 225 DAFs at the community foundation, Young shared that the goal is to ensure at least 80% of DAFs are making grants annually.
“Obviously there is a charitable tax benefit for DAF holders, but they are charitably minded,” Young said. “We make sure to work with them to make sure they see the importance of mobilizing those dollars.”
GRCF has shared the critical role DAF holders have played in their COVID-19 response efforts to continue advancing toward recovery and reimagining the community’s future, with DAFs increasing the amount of grant dollars distributed to nonprofits by 23% in 2020 alone.
Young shared how the community foundation structures DAF opportunities both for short-term and long-term community support and continues to work to unlock new opportunities for donors of all giving levels in the community.
Over the years, GRCF has adjusted their DAF donor requirements in an effort to better promote diversity in age, socioeconomic backgrounds and beyond.
“We looked at the diversity of our DAF holders and saw that they were not diverse in age, so we lowered the fund minimum, and we also created a spend-down option that allows the donor to use it as a charitable checkbook to spend it out and then replenish it,” Young said.
GRCF’s DAFs can be established as endowed, non-endowed (spendable) or a hybrid of both.
As CMF has shared, endowed DAFs serve as permanent charitable capital, designed to address community needs now and in the future, allowing foundations that hold endowed DAFs to draw on those assets forever. A non-endowed or spendable DAF is intended to be used by donors to fill the fund and payout the majority of the fund within a short period of time.
The community foundation has also allowed donors to build a fund over five years and then spend down to increase feasibility for more people to give as DAF holders. As a result of these changes, GRCF has seen more younger donors open DAFs.
The community foundation continues to work to increase racial and ethnic diversity amongst their DAF holders.
Young shared that GRCF supports individuals, families, nonprofits, companies and communities in West Michigan to achieve their philanthropic goals and move the needle forward on racial, social and economic justice in Kent County. The community foundation shares funding opportunities that align with their core principles of diversity, equity and inclusion (DEI) with donor advisors.
“We’ve taken a strong stand around our North Star guiding principles that centers around DEI,” Young said.
All of GRCF’s grantmaking, fund development, communication, administration, finance and human resources aligns with their North Star principles which states, “for West Michigan to grow and prosper, we must make sure that everyone can apply their talents and creativity to fuel our future. It is only by connecting across perspectives and overcoming inequities that we can build and sustain an inclusive economy and thriving community.”
CMF released phase 3 of our payout rate research series, Analysis of Donor Advised Funds from a Community Foundation Perspective, focusing on the payout rates of donor advised funds (DAFs) within the context of the philanthropic sector, specifically the payout rates of DAFs administered by Michigan community foundations. CMF has also crafted a comprehensive FAQ on DAFs and Payout Rates to help our community of philanthropy and sector partners navigate phase 3 of our payout rate research series.
Through the development of this research and its release the CMF team has uncovered many untapped opportunities to share the roles and functions of DAFs in communities both within our sector and more broadly. We invite you to read more impactful DAF stories emerging from our network of Michigan community foundations.