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DAF Assets Top $234 Billion While Controversy Continues

Total distributions exceed 27% of fund value, while critics seek to delay tax breaks
Total assets held by donor advised funds across the country rose to $234.06 billion in 2021, an increase of 39.5% over the prior year, and continuing a steady annual increase in values from a total of $112.8 billion in 2017, according to the latest annual report from the National Philanthropic Trust issued in late November. The total number of DAFs held by the 995 DAF sponsors surveyed rose to 1,285,801, a 27.6% increase from the number in 2020, also reflecting annual increases up from 401,036 in 2017. Donors contributed $72.67 billion in new money to DAFs, up 46.6% from 2020, and the amount distributed rose to $45.74 billion, up 28.2% from 2020. Both contributions and distributions in 2021...

Gender and Race Gaps Narrow Slightly On Boards of Philadelphia Area Meds and Eds

While many have made significant progress since 2019, many still fail to reflect the diversity of constituents and communities
The Women’s Nonprofit Leadership Initiative and the Nonprofit Center of La Salle University have published an updated report focused on the boardrooms of the Philadelphia area’s largest nonprofit medical and educational institutions (“meds” and “eds”). The report reveals that many have made significant progress in the last three years in increasing the gender and racial diversity of their governing bodies. Many of the boards, however, still fail to reflect the diversity of the staffs, students, patients, and the communities they serve, and board chairs are still predominantly white males. “ Closing the Gaps: Gender and Race in Nonprofit Boardrooms ” follows their 2019 report on “The Gender...

VMI Can’t Force Termination Of Charitable Trust for Its Benefit

Pa. Court says potential cost savings do not overcome paramount intent of donor to keep assets in separate trust
The Superior Court of Pennsylvania, an intermediate appellate court, has affirmed a trial court decision and denied a request of the Virginia Military Institute to terminate a $2 million trust for its benefit and transfer the assets to its affiliated foundation outright. In what it called a case of first impression, the Court upheld the position of the trustee bank and the state attorney general that the donor had intended to keep the assets separate from the institution and a difference in cost was not sufficient to deviate from that intent. Richard H. Wells, a graduate of VMI in the class of 1924, became president of the Oil City Trust Company in Pennsylvania in 1952 and significantly...

DAF Donor Lacks Standing To Sue Over Excessive Fees

Court of Appeals affirms trial court decision dismissing case against Schwab Charitable Fund
The Ninth Circuit Court of Appeals has affirmed a trial court decision dismissing a suit by the creator of a donor advised fund who sought reputational and other damages on the ground that the sponsor of the DAF paid excessive fees for managing the investments and deprived him of funds to distribute to other charities. ( See Nonprofit Issues ® Vol. XXXI No. 2 ) The Court has ruled that the donor lacks standing to sue when he has given up all rights to the assets. Philip Pinkert sued Schwab Charitable Fund and claimed he was injured in four ways. He claimed that he had retained a property right to direct the use of the funds and the excessive fees impaired his ability to exercise that...

Descendant of Enslaved People May Sue Harvard for Emotional Distress

Appellate court says university had duty to deal with ancestral issues, but dismisses claims for property rights in degrading daguerreotypes
In 1850 noted Harvard University professor Louis Agassiz arranged to have four daguerreotypes made of Renty Taylor and Delia Taylor, who were enslaved on a plantation in South Carolina. Renty was ordered to disrobe. His daughter was striped to the waist. Their images were used by Agassiz in an academic publication and various lectures “to support polygenism, a pseudoscientific racist theory for which Aggasiz, a prominent scientist, was a vocal proponent,” according to the highest court of Massachusetts. The pictures were subsequently transferred to Harvard’s Peabody Museum of Archaeology and Ethnology where they “remained in obscurity” until rediscovered in 1976. The discovery attracted...

Court Denies Deduction for DAF Gift For Lack of Adequate Acknowledgement

Substantiation letter failed to state that recipient had “exclusive legal control” over funds
A federal District Court in Texas has upheld an IRS denial of a $1.257 million charitable contribution deduction claim for a gift to a donor advised fund because, it said, the contemporary written acknowledgment of the gift did not say the money was held under the “exclusive legal control” of the recipient charity. The Court said that the Contemporaneous Written Acknowledgment could not be combined with the gift agreement, which provided for ultimate authority and control of the assets, to meet the requirements of the Treasury regulations. Kevin and Patricia Keefer donated the proceeds from the sale of a 4% limited partnership interest in a partnership that was selling a hotel in Burbank CA...

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