Nearly a third of the year’s charitable giving will take place this month, and Americans unofficially began this season of generosity on Giving Tuesday, donating $3.1 billion to U.S. nonprofits in a single day. As Californians open their pocketbooks to those in need – helping to address challenges like homelessness, poverty alleviation and access to medical care – it’s a good time to remember they are most effective in their charity when they are free to give to the causes they care about most.
That’s why California’s leaders should resist efforts that would restrict charitable giving and ultimately reduce support for nonprofits tackling the Golden State’s biggest challenges. After all, a strong charitable sector strengthens our communities. Yet in 2023 alone, at least 22 states have considered legislation that threatens donor privacy and could chill charitable giving.
With needs high on multiple fronts, flexibility in giving is more important than ever. A new Philanthropy Roundtable report highlights how California-based community foundations are using donor-advised funds (DAFs), charitable savings accounts, to make a difference. For example, contributions to DAFs are helping organizations provide specialized services for senior citizens, giving children access to environmental education programs and instilling in them a love for reading.
DAFs are popular tools for giving around the country. They give individuals the ability to set aside funds—used only for charities—that can be donated immediately or in the future. Due to their versatility and relative simplicity, DAFs have become the fastest-growing vehicle for charitable giving in recent years. In California, our research of 22 community foundations showed the average DAF payout rate in fiscal years 2021 and 2022 was an impressive 22%. Critics claim DAFs are withholding money while donors still get tax breaks. But our research clearly demonstrates a steadfast commitment to regular and generous giving in the state.
The recent COVID-19 pandemic also showed the unique ability of DAFs to serve as a rainy-day fund in times of crisis is vital. In addition to providing the flexibility to respond quickly during emergencies, DAFs allow donors to have a long-term and potentially greater impact because they can be invested and grow over time.
Perhaps no other California organization knows the value of DAFs for charitable giving and donor privacy like Planned Parenthood, which provides health care services and education to Californians struggling with poverty, homelessness and other challenges. Unfortunately, Planned Parenthood locations and their staff have faced many threats in recent years. Due partially to this, some Planned Parenthood donors may prefer to give to the group anonymously.
To give and associate anonymously is a constitutionally protected right —confirmed most recently by the U.S. Supreme Court decision in Americans for Prosperity Foundation v. Bonta. In 2021, filings in the case revealed a serious breach of donor privacy when the California government published Planned Parenthood Affiliates of California’s Schedule B tax form that exposed the names and addresses of hundreds of their donors, putting them at risk of harassment and threats of violence. Giving through DAFs provides donors with some protection against these risks and can serve as a preventive security measure against data leaks and breaches.
American Civil Liberties Union Foundation (ACLU) is another group that values donor privacy and supported it in the Americans for Prosperity Foundation case. Its foundation knows well the importance of access to flexible funding as it pursues work protecting a wide array of civil liberties from free speech and religious liberty to immigrants’ and prisoners’ rights. Given the hefty price tag of litigation, DAFs can help provide the funding needed to take advantage of opportunities to represent people in need.
As lawmakers consider their priorities this season of giving and in the new year, they should recognize the work California donors and nonprofits are doing to improve lives – and keep these charitable efforts free of unnecessary or arbitrary restrictions. Our local charities rely on this support and the flexibility it affords them to respond to the variety of great needs in our communities.
