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So essentially Donor Advised Funds are better in every way for the donor, including but not limited to being more private, way less arbitrary restrictions (dona

So essentially Donor Advised Funds are better in every way for the donor, including but not limited to being more private, way less arbitrary restrictions (donate 5% a year -- why?) and allowing them control of where they donate. And this is competition for non-profits of other kinds, that are mostly just a way for people to pay themselves giant base salaries, relative to a donor-controlled fund. And further, this article is basically calling out a person in particular for putting $500M into a fund for the purpose of philanthropy (sooner or later) and then not having made enough donations (it would better if he had to donate 5%/year -- again, why?). Then goes on to quote a professor calling it fraud, despite it still being legitimately a way for people to donate assets like stock to charity in a one-way vehicle that they control, as if that is bad somehow. Evidently people are so angry at successful people at this point, they are not going after their charity too, again not clear on why.

dmoy 8y ago
Not clear why this comment is getting downvoted, seems like a reasonable summary to me. From the title I was expecting the article to be more nefarious, like "donating" to a charity that pays obscene salaries to friends & family for cushy jobs or something.
- danso 8y ago
  It's not a reasonable summary. From the parent commenter: > And further, this article is basically calling out a person in particular for putting $500M into a fund for the purpose of philanthropy (sooner or later) and then not having made enough donations (it would better if he had to donate 5%/year -- again, why?). From the article: > But four years on, there is almost no trace of the Woodman Foundation, or that $500 million. The foundation has no website and has not listed its areas of focus, and it is not known what — if any — significant grants it has made to nonprofits...If the benefit to the needy is difficult to see, the benefit to Mr. Woodman is clear. After GoPro’s initial public offering, he faced an enormous tax bill in 2014. But by donating via the Silicon Valley Community Foundation, he eased his tax burden in two ways. First, Mr. Woodman avoided paying capital gains taxes on that $500 million worth of stock, a figure that most likely would have been in the tens of millions of dollars. He was also able to claim a charitable deduction that most likely saved millions of dollars more, and probably reduced his personal tax bill for years to come. The parent commenter goes on to sum up the article as thus: > Evidently people are so angry at successful people at this point, they are [now] going after their charity too, again not clear on why. The article asserts early on that the problem is lack of transparency: > Mr. Woodman achieved this enticing combination of tax efficiency and secrecy by using a donor-advised fund — a sort of charitable checking account with serious tax benefits and little or no accountability...So while donors enjoy immediate tax benefits, charities can wait for funds indefinitely, and maybe forever.
  - dmoy 8y ago
    I still don't quite see how it's an issue. The money can't not go to a charity, it's just a question of when. Why is the time lag such a cause for concern? Say I donate money towards an effort that takes 10 years to get tangible results, so what? If there's some shady behavior later to try to illegally claw back charity donations, then sure, that's messed up. But just delaying it N years? So? It still goes to charity at the end. By the same logic, do people get super upset when someone doesn't donate to charity during their life and instead just donated the vast majority of their estate on death? It has nearly the same effect. Maybe people do get upset about that, I dunno.
    - downandout 8y ago
      Why is the time lag such a cause for concern? It's not a cause for concern. It just makes for nice clickbait headlines, and stories full of innuendo with zero proof of actual wrongdoing. In this case, they don't even really make a clear accusation of wrongdoing. This way, they won't get sued over this drivel, but they will get clicks, and those clicks will cause ad impressions.
    - _jal 8y ago
      In public policy, when you insert a time-lag between reward and behavior for which one is rewarded, there is at least cause for concern. See basically every metro-telecom deal ever for evidence. And transparency is vital. Any time there are dark corners, people find a way to fester in them. See every society, ever. Finally, there's really just a degree of gided-age wealth-fatigue. You have to expect it at a certain point - humans are exquisitely attuned to status differences; it is just how they're wired.
      - Washuu 8y ago
        If I suddenly had billions in stock laying in my lap I would be wishing to donate a bunch of money to help offset that tax bill. I know what I could do with $10,000,000 right this moment. The remaining $490,000,000 from the example in the article? I do not know yet, but eventually I will find something.
petilon 8y ago
> allowing them control of where they donate They are also not required to disclose how the charitable dollars are spent. You don't see the problem here? How do we, as taxpayers, know the money is even being spent for real charitable purposes? See for example this story: https://www.telegraph.co.uk/news/2018/06/14/new-york-attorney-general-sues-close-trump-foundation-misuse/ https://www.telegraph.co.uk/news/2018/06/14/new-york-attorne...
- woolvalley 8y ago
  The same way the IRS audits donations and non-profits in general? How is this any different from a person directly donating $X dollars other than the ability to sit and wait and think about it? Do I get to see what a private citizen donates to directly unless that organization that receives the money discloses who donated how much?
  - petilon 8y ago
    > How is this any different from a person directly donating $X dollars You have to disclose the recipient of the donation to IRS. That's the difference. These "Donor Advised Funds" apparently don't have to report disbursements.
    - deleted 8y ago
      [deleted]
    - astura 8y ago
      I don't think that's the case. > And because organizations that manage D.A.F.s are not required to report which funds give money to which causes, it is impossible to know how much money individual donors are giving away to nonprofit organizations. That doesn't mean the donor advised fund isn't required to report the givings the fund makes, it means it isn't required to report who gave to whom. I would be shocked if the DAF managers aren't required to report spending/giving, because they are also 501c3 themselves.
- kharms 8y ago
greglindahl 8y ago
The 5% rule was created relatively recently to prevent infinite growth of charities... which has been an actual problem since the Golden Era of Robber Barons.
downandout 8y ago
Yeah I don't see the controversy here. Clearly the author has an agenda. Look at this gem: "...[Mr. Woodman] was giving away much of that wealth — some $500 million worth of GoPro stock — to the Silicon Valley Community Foundation...Mr. Woodman avoided paying capital gains taxes on that $500 million worth of stock, a figure that most likely would have been in the tens of millions of dollars..." Of course he avoided capital gains on the stock he gave away - he couldn't sell it anymore because it was no longer his. The entire section about Nick Woodman strives to imply that something improper has occurred, but all I see is a successful entrepreneur that gave away a large part of his fortune. Regardless of how long it takes for that money to be distributed by the charitable fund, the money is forever no longer his.
- hundt 8y ago
  It's at least little bit fishy that you can get a $500 million deduction for giving away stock that is never worth $500 million to anyone (since giving it away tanked the sale price, and selling it would presumably drive it down even farther). Of course the main reason for that is other parts of the tax code, not DAFs. But I think DAFs get targeted for criticism because they make it a lot easier to exploit these kinds of flaws.
  - deleted 8y ago
    [deleted]
  - wgjordan 8y ago
    > It's at least little bit fishy that you can get a $500 million deduction for giving away stock that is never worth $500 million to anyone (since giving it away tanked the sale price, and selling it would presumably drive it down even farther). I'm not entirely sure you can, based on my reading of 26 CFR 1.170A-1(c)(3) [1]: > (3) If a donor makes a charitable contribution of property, such as stock in trade, at a time when he could not reasonably have been expected to realize its usual selling price, the value of the gift is not the usual selling price but is the amount for which the quantity of property contributed would have been sold by the donor at the time of the contribution. [1] https://www.law.cornell.edu/cfr/text/26/1.170A-1 https://www.law.cornell.edu/cfr/text/26/1.170A-1
ChristianBundy 8y ago
> Evidently people are so angry at successful people at this point Because "successful" people are laughably just capitalists whose only success is extracting wealth from people who actually work for a living. Capitalism isn't a system that benefits the vast majority of people and being a "successful" capitalist is bad for our planet and society.
- WalterBright 8y ago
  > extracting wealth from people who actually work for a living This is the Labor Theory of Value, which is regularly debunked. Capitalists create value, they don't take it from others. (You can see this on the balance sheet - the business is worth more than its "book value".) > Capitalism isn't a system that benefits the vast majority of people The vast majority of immigrants arrived in the US with little more than a suitcase, yet capitalism made them wealthy. > bad for our planet and society Non-capitalist societies are far more destructive to the planet.
  - ChristianBundy 8y ago
    1. You're conflating owners and managers. Private ownership of the means of production doesn't add anything of value, but of course organizing people and resources is valuable. My point is that you don't need to have a monoply (or oligopoly) of power concentrated in private shareholders. 2. I'm not interested in myths. Look up statistics on immigrant poverty under capitalism and let me know whether you'd like to continue this line of reasoning. 3. Some, yes. All? Of course not.
    - ghufran_syed 8y ago
      About point 2: Almost all wealth in this country is owned by people who do not identify as Native American. The US is the most successful society economically over a long period of time. The US has a capitalist system, probably more so than most other countries. Doesn’t that imply that the wealth in this country was generated by immigrants (and their descendants) under a capitalist system?
    - 8y ago

dmoy 8y ago

Not clear why this comment is getting downvoted, seems like a reasonable summary to me. From the title I was expecting the article to be more nefarious, like "donating" to a charity that pays obscene salaries to friends & family for cushy jobs or something.

danso 8y ago
It's not a reasonable summary. From the parent commenter: > And further, this article is basically calling out a person in particular for putting $500M into a fund for the purpose of philanthropy (sooner or later) and then not having made enough donations (it would better if he had to donate 5%/year -- again, why?). From the article: > But four years on, there is almost no trace of the Woodman Foundation, or that $500 million. The foundation has no website and has not listed its areas of focus, and it is not known what — if any — significant grants it has made to nonprofits...If the benefit to the needy is difficult to see, the benefit to Mr. Woodman is clear. After GoPro’s initial public offering, he faced an enormous tax bill in 2014. But by donating via the Silicon Valley Community Foundation, he eased his tax burden in two ways. First, Mr. Woodman avoided paying capital gains taxes on that $500 million worth of stock, a figure that most likely would have been in the tens of millions of dollars. He was also able to claim a charitable deduction that most likely saved millions of dollars more, and probably reduced his personal tax bill for years to come. The parent commenter goes on to sum up the article as thus: > Evidently people are so angry at successful people at this point, they are [now] going after their charity too, again not clear on why. The article asserts early on that the problem is lack of transparency: > Mr. Woodman achieved this enticing combination of tax efficiency and secrecy by using a donor-advised fund — a sort of charitable checking account with serious tax benefits and little or no accountability...So while donors enjoy immediate tax benefits, charities can wait for funds indefinitely, and maybe forever.
- dmoy 8y ago
  I still don't quite see how it's an issue. The money can't not go to a charity, it's just a question of when. Why is the time lag such a cause for concern? Say I donate money towards an effort that takes 10 years to get tangible results, so what? If there's some shady behavior later to try to illegally claw back charity donations, then sure, that's messed up. But just delaying it N years? So? It still goes to charity at the end. By the same logic, do people get super upset when someone doesn't donate to charity during their life and instead just donated the vast majority of their estate on death? It has nearly the same effect. Maybe people do get upset about that, I dunno.
  - downandout 8y ago
    Why is the time lag such a cause for concern? It's not a cause for concern. It just makes for nice clickbait headlines, and stories full of innuendo with zero proof of actual wrongdoing. In this case, they don't even really make a clear accusation of wrongdoing. This way, they won't get sued over this drivel, but they will get clicks, and those clicks will cause ad impressions.
  - _jal 8y ago
    In public policy, when you insert a time-lag between reward and behavior for which one is rewarded, there is at least cause for concern. See basically every metro-telecom deal ever for evidence. And transparency is vital. Any time there are dark corners, people find a way to fester in them. See every society, ever. Finally, there's really just a degree of gided-age wealth-fatigue. You have to expect it at a certain point - humans are exquisitely attuned to status differences; it is just how they're wired.
    - Washuu 8y ago
      If I suddenly had billions in stock laying in my lap I would be wishing to donate a bunch of money to help offset that tax bill. I know what I could do with $10,000,000 right this moment. The remaining $490,000,000 from the example in the article? I do not know yet, but eventually I will find something.

petilon 8y ago

> allowing them control of where they donate They are also not required to disclose how the charitable dollars are spent. You don't see the problem here? How do we, as taxpayers, know the money is even being spent for real charitable purposes? See for example this story: https://www.telegraph.co.uk/news/2018/06/14/new-york-attorney-general-sues-close-trump-foundation-misuse/ https://www.telegraph.co.uk/news/2018/06/14/new-york-attorne...

woolvalley 8y ago
The same way the IRS audits donations and non-profits in general? How is this any different from a person directly donating $X dollars other than the ability to sit and wait and think about it? Do I get to see what a private citizen donates to directly unless that organization that receives the money discloses who donated how much?
- petilon 8y ago
  > How is this any different from a person directly donating $X dollars You have to disclose the recipient of the donation to IRS. That's the difference. These "Donor Advised Funds" apparently don't have to report disbursements.
  - deleted 8y ago
    [deleted]
  - astura 8y ago
    I don't think that's the case. > And because organizations that manage D.A.F.s are not required to report which funds give money to which causes, it is impossible to know how much money individual donors are giving away to nonprofit organizations. That doesn't mean the donor advised fund isn't required to report the givings the fund makes, it means it isn't required to report who gave to whom. I would be shocked if the DAF managers aren't required to report spending/giving, because they are also 501c3 themselves.
kharms 8y ago

greglindahl 8y ago

The 5% rule was created relatively recently to prevent infinite growth of charities... which has been an actual problem since the Golden Era of Robber Barons.

downandout 8y ago

Yeah I don't see the controversy here. Clearly the author has an agenda. Look at this gem: "...[Mr. Woodman] was giving away much of that wealth — some $500 million worth of GoPro stock — to the Silicon Valley Community Foundation...Mr. Woodman avoided paying capital gains taxes on that $500 million worth of stock, a figure that most likely would have been in the tens of millions of dollars..." Of course he avoided capital gains on the stock he gave away - he couldn't sell it anymore because it was no longer his. The entire section about Nick Woodman strives to imply that something improper has occurred, but all I see is a successful entrepreneur that gave away a large part of his fortune. Regardless of how long it takes for that money to be distributed by the charitable fund, the money is forever no longer his.

hundt 8y ago
It's at least little bit fishy that you can get a $500 million deduction for giving away stock that is never worth $500 million to anyone (since giving it away tanked the sale price, and selling it would presumably drive it down even farther). Of course the main reason for that is other parts of the tax code, not DAFs. But I think DAFs get targeted for criticism because they make it a lot easier to exploit these kinds of flaws.
- deleted 8y ago
  [deleted]
- wgjordan 8y ago
  > It's at least little bit fishy that you can get a $500 million deduction for giving away stock that is never worth $500 million to anyone (since giving it away tanked the sale price, and selling it would presumably drive it down even farther). I'm not entirely sure you can, based on my reading of 26 CFR 1.170A-1(c)(3) [1]: > (3) If a donor makes a charitable contribution of property, such as stock in trade, at a time when he could not reasonably have been expected to realize its usual selling price, the value of the gift is not the usual selling price but is the amount for which the quantity of property contributed would have been sold by the donor at the time of the contribution. [1] https://www.law.cornell.edu/cfr/text/26/1.170A-1 https://www.law.cornell.edu/cfr/text/26/1.170A-1

ChristianBundy 8y ago

> Evidently people are so angry at successful people at this point Because "successful" people are laughably just capitalists whose only success is extracting wealth from people who actually work for a living. Capitalism isn't a system that benefits the vast majority of people and being a "successful" capitalist is bad for our planet and society.

WalterBright 8y ago
> extracting wealth from people who actually work for a living This is the Labor Theory of Value, which is regularly debunked. Capitalists create value, they don't take it from others. (You can see this on the balance sheet - the business is worth more than its "book value".) > Capitalism isn't a system that benefits the vast majority of people The vast majority of immigrants arrived in the US with little more than a suitcase, yet capitalism made them wealthy. > bad for our planet and society Non-capitalist societies are far more destructive to the planet.
- ChristianBundy 8y ago
  1. You're conflating owners and managers. Private ownership of the means of production doesn't add anything of value, but of course organizing people and resources is valuable. My point is that you don't need to have a monoply (or oligopoly) of power concentrated in private shareholders. 2. I'm not interested in myths. Look up statistics on immigrant poverty under capitalism and let me know whether you'd like to continue this line of reasoning. 3. Some, yes. All? Of course not.
  - ghufran_syed 8y ago
    About point 2: Almost all wealth in this country is owned by people who do not identify as Native American. The US is the most successful society economically over a long period of time. The US has a capitalist system, probably more so than most other countries. Doesn’t that imply that the wealth in this country was generated by immigrants (and their descendants) under a capitalist system?
  - 8y ago