The DARK SIDE of Philanthropy

The ‘Black Hole’ That Sucks Up Silicon Valley’s Money

A fast-growing type of charitable account gets big tax breaks but little oversight

by Alana Semuels is a staff writer at The Atlantic. She was previously a national correspondent for the Los Angeles Times.

Extracted quotes …

The amount of money going from the Silicon Valley Community Foundation to the nine-county Bay Area actually dropped in 2017 by 46 percent, even as the amount of money under management grew by 64 percent, to $13.5 billion.

Though donors receive a big tax break for donating to donor-advised funds, the funds have no payout requirements, unlike private foundations, which are required to disperse 5 percent of their assets each year.

Cantor, the nonprofit consultant, told me that he had met wealthy individuals who said they were setting up donor-advised funds so that their children could disperse the funds and learn about philanthropy—they had no intent to spend the money in their own lifetimes.

“Right now, too many tax-subsidized contributions are being set aside indefinitely—subject to no obligation for them ever to be put to active charitable use,” Madoff and Roger Colinvaux, a professor at Columbus School of Law, wrote in a letter to the Senate Committee on Finance in July.

Read the full story by clicking on the following link …

May 19, 2018

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