4 ms·

I set up a DAF when Google went public in 2004. I've spent 25-50% of it in the intervening 13 years, despite best intentions. I sure took that full tax break in

I set up a DAF when Google went public in 2004. I've spent 25-50% of it in the intervening 13 years, despite best intentions. I sure took that full tax break in 2004 though and have compounded the value of that annually. So in my case the DAF has not worked as a great way to funnel money to actual charities. It just sits idle, compounding. The tax break I got seems to outweigh the public benefit. The psychology of having the DAF is funny. I sort of feel the virtue of having donated to charity every single year, just looking at the balance. When I do make a grant from the DAF I don't really feel like I'm doing anything more worthwhile. Also it's a bit impersonal because you have to recommend the grant then wait several days for the DAF to actually allocate. OTOH it's nice having a pile of money I've already "spent" that I can use to give to things at a whim. I think the solution is to require DAFs spend some large portion of their balance every single year. Charitable foundations are required to distribute something like 5%, but I think 10% or more makes more sense for an individual's DAF. There's also a strong argument that charitable donations shouldn't be tax deductible at all, remove this whole tax gimmick and economic distortion. I'm not sure I fully buy it (and the transition would be brutal) but it is worth reading: https://www.economist.com/briefing/2012/06/09/sweetened-charity https://www.economist.com/briefing/2012/06/09/sweetened-char...

cbhl 8y ago
I really wish non-profits could have for-profit endowment components in them, instead of having to ask for money every year. Rather than giving now or giving later, we could be giving forever by only spending the interest on the capital.
- maxerickson 8y ago
  One of Bill Gates ambitions is to have his foundation be done when he dies. He doesn't want it to go on forever with the mission drifting away from his and so on. How does what you are thinking line up with Mozilla Foundation and Mozilla Corporation? The corporation does most of the stuff we think of as Mozilla and is wholly owned by the foundation.
- namibj 8y ago
  Germany has/had some old institutions [0] that work(ed) that way. The keyword is Stiftung [1]. There seems to be nothing comparable in the US though, and you don't get a tax break for the donation, even though any business it conducts in the states is treated like a 501(c), provided it would be classified a 501(c) if it were a US based institution. [0]: https://en.wikipedia.org/wiki/B%C3%BCrgerspital_zum_Heiligen_Geist https://en.wikipedia.org/wiki/B%C3%BCrgerspital_zum_Heiligen... [1]: https://en.wikipedia.org/wiki/Stiftung https://en.wikipedia.org/wiki/Stiftung
  - slededit 8y ago
    A number of funded charities are setup that way. Carnegie made many of them. Bill Gates is actually a bit unusual in terms of the ultra rich setting up foundations - most wanted their institutions to carry on indefinitely. However BillG is adament the money is spent completely shortly after his death as he doesn't feel the dead should control the future. https://en.wikipedia.org/wiki/Carnegie_Endowment_for_International_Peace https://en.wikipedia.org/wiki/Carnegie_Endowment_for_Interna... http://carnegieendowment.org/about/pdfs/carnegie_trusts.pdf http://carnegieendowment.org/about/pdfs/carnegie_trusts.pdf
- gamblor956 8y ago
  Non-profits can have a for-profit component. They simply have to pay taxes on the for-profit component if it's not directly part of their charitable purpose. (It gets complicated, but for example: museum admissions fees are generally not taxable; gift shop income isn't taxable if all the stuff is related to the exhibits, etc.)
skybrian 8y ago
Or maybe even higher like 30%? The benefit of a DAF is that you can take longer to decide on a charity if you're not sure what you want to do. But three years should be enough time to figure it out? How much time do people need?

cbhl 8y ago

I really wish non-profits could have for-profit endowment components in them, instead of having to ask for money every year. Rather than giving now or giving later, we could be giving forever by only spending the interest on the capital.

maxerickson 8y ago
One of Bill Gates ambitions is to have his foundation be done when he dies. He doesn't want it to go on forever with the mission drifting away from his and so on. How does what you are thinking line up with Mozilla Foundation and Mozilla Corporation? The corporation does most of the stuff we think of as Mozilla and is wholly owned by the foundation.
namibj 8y ago
Germany has/had some old institutions [0] that work(ed) that way. The keyword is Stiftung [1]. There seems to be nothing comparable in the US though, and you don't get a tax break for the donation, even though any business it conducts in the states is treated like a 501(c), provided it would be classified a 501(c) if it were a US based institution. [0]: https://en.wikipedia.org/wiki/B%C3%BCrgerspital_zum_Heiligen_Geist https://en.wikipedia.org/wiki/B%C3%BCrgerspital_zum_Heiligen... [1]: https://en.wikipedia.org/wiki/Stiftung https://en.wikipedia.org/wiki/Stiftung
- slededit 8y ago
  A number of funded charities are setup that way. Carnegie made many of them. Bill Gates is actually a bit unusual in terms of the ultra rich setting up foundations - most wanted their institutions to carry on indefinitely. However BillG is adament the money is spent completely shortly after his death as he doesn't feel the dead should control the future. https://en.wikipedia.org/wiki/Carnegie_Endowment_for_International_Peace https://en.wikipedia.org/wiki/Carnegie_Endowment_for_Interna... http://carnegieendowment.org/about/pdfs/carnegie_trusts.pdf http://carnegieendowment.org/about/pdfs/carnegie_trusts.pdf
gamblor956 8y ago
Non-profits can have a for-profit component. They simply have to pay taxes on the for-profit component if it's not directly part of their charitable purpose. (It gets complicated, but for example: museum admissions fees are generally not taxable; gift shop income isn't taxable if all the stuff is related to the exhibits, etc.)

skybrian 8y ago

Or maybe even higher like 30%? The benefit of a DAF is that you can take longer to decide on a charity if you're not sure what you want to do. But three years should be enough time to figure it out? How much time do people need?