Corporate Donor-Advised Funds: Benefits and Guidelines
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Surprisingly, though many business owners and executives are among the 1,000,000 donors who have established their own personal donor-advised fund (DAF) accounts, relatively few companies they own or manage have set up corporate DAFs. Businesses have often been generous in supporting charities and causes, especially in the past few years during the recent crises. Giving USA recently reported that corporate giving in 2021 increased by 23.8% to $21 billion, yet a good number of companies have not established a strategic giving plan.
Establishing a corporate DAF is simple and very similar to creating a personal or family DAF, though the initial contributions to create accounts are typically larger. Some firms have established company foundations, but like personal private foundations, these are often cumbersome to operate and are more expensive than a corporate DAF. Some company foundations have closed, while others have converted to DAFs so they can still enjoy the benefits of having a charitable vehicle without the complexity and administrative burdens of the foundation.
Corporate DAFs have not been heavily promoted, as some of the largest DAF sponsors do not offer them or charge significant additional fees to administer them. However, since companies recognize the importance of giving back, want to demonstrate their commitment to their communities and employees, and personal DAFs have become so widespread, the interest in them has been growing over the past few years.
Much of this interest has come from privately-owned companies, especially those that have been very successful while seeing the ongoing challenges and issues in society.