It’s undeniable. Christians give more at the end of the calendar year. According to one nonprofit research group, “30% of annual giving occurs in December.” Churches and religious organizations continue to be the primary beneficiary of all charitable giving in America.
Over the past few decades, donor-advised funds have become a popular tool for Christians to use for their charitable giving. The PCA Foundation has grown significantly over the past five years and most of the growth has come through donor-advised funds.
What is a donor-advised fund?
A donor-advised fund is a fund you open with a foundation like the PCA Foundation. You can donate stocks, bonds, mutual funds, real estate, and more complex assets like your privately held business. You receive an immediate tax deduction because you made a donation to a qualified charity. Then, you can make grant recommendations from your donor-advised fund to a qualified charity of your choice.
Why do Christians use them?
1. Donor-advised funds are simple to open and manage. You can open one with a few clicks and access it through a secure portal much like a checking account. Our Advise & Consult Fund® is free, which means 100% of your gift is available for distribution to your church or favorite Christian ministry.
2. Donor-advised funds enable you to give now and decide later. Every December, Christians find themselves with more charitable desires than time affords them to consider. A donor-advised fund enables donors to give, receive a charitable deduction, and take time to decide how they want to distribute their charitable contributions. It isn’t unusual for Christians to receive bonuses or performance pay in December. A donor-advised fund gives them time to prayerfully consider how and when God wants them to give these resources to support worthwhile causes.
3. Donor-advised funds enable you to give on a schedule. You can donate $25,000 to your donor-advised fund today, receive an immediate tax deduction, and then schedule your favorite charities to receive a gift on an established schedule. For example, you can direct a gift of $500 to Charity A, a gift of $250 to Charity B, and another gift of $250 to Charity C every month. Christians often use their donor-advised fund like a personal charitable checking account, making automatic grants to their favorite organizations.
4. Donor-advised funds enable you to give anonymously. Do you want to give a special gift to your favorite nonprofit without drawing attention to yourself? A donor-advised fund enables you to give anonymously. Every grant you make is sent out in electronic form from the PCA Foundation. The grant confirmation to the charity can include or omit a reference to the donor who recommended the grant. A donor-advised fund is a great way to give in secret while retaining all the benefits of a charitable deduction.
5. Donor-advised funds can accept all types of assets. Local churches are typically not equipped to accept assets other than cash gifts. If you possess stock, real estate, or more complex assets, donor-advised fund providers have the expertise necessary to facilitate these donations. They are able to accept cryptocurrency as well.
Not All Donor-Advised Funds Are Created Equal
According to the National Philanthropic Trust, there are 995 organizations sponsoring donor-advised funds. The PCA Foundation is one such organization. But when Christians open DAFs, they are often unaware that each sponsoring organization sets parameters for the types of organizations to which it will grant.
The largest donor-advised fund sponsor is Fidelity Charitable Gift Fund. As the nation’s largest grantmaker, Fidelity is under increasing pressure to eliminate grants to any organization that refuses to support LGBT causes. As cultural headwinds shift, Christians have no guaranteed protections that they will be able to recommend grants from their Fidelity DAFs to their churches and ministries.
A recent report from the 1792 Exchange classified Fidelity Charitable as a High Risk company. The Spotlight Report takes publicly available information to examine a company’s “policies, practices, and other relevant criteria to determine the likelihood a company will cancel a contract or client, or boycott, divest, or deny services based on views or beliefs.” Similarly, Schwab Charitable Fund, the second largest donor-advised fund sponsor, was labeled as a High Risk due to its refusal to grant to some Christian organizations that were identified as a hate group by the Southern Poverty Law Center.
It is important for Christians to understand that their charitable assets can be restricted by the DAF sponsoring organization. By the nature of a donor-advised fund, once you make a donation, the assets no longer belong to you but to the sponsoring organization. (You can confirm this by looking at the receipt you receive from the DAF sponsor for contributions you make to your DAF.) As a result, the sponsoring organization is not bound to return your assets to you or transfer them elsewhere. They retain full rights as to the disposition of the gifts you donated.
For these reasons and more, it is important for Christians to make sure they use a donor-advised fund that aligns with their biblical values. At the PCA Foundation, we have bylaws that prevent us from distributing grants to organizations whose values and practices are antithetical to Scripture. Every year, we have to refuse grant recommendations because the benefitting organizations have beliefs or practices that contradict God’s Word.
It is exciting to see the increased generosity among Christians. Our hope and prayer is to see more assets deployed to churches and ministries that are committed to Scripture and the advancement of Christ’s Kingdom.