If not now, when?
Over the past year, Tides has sent a powerful message to our donors that today’s crises—including racial injustice, COVID-19, climate change, and ongoing efforts to undermine our democracy—demand that we step up. This is no time to hold back funds that nonprofits and communities urgently need right now to tackle tough issues and continue the fight to build a world of shared prosperity and social justice.
And how have Tides donors responded to our calls to action? With bold generosity.
During 2020, Tides Foundation donor-advised funds (DAFs) disbursed $458 million in grants globally, compared to $262 million in 2019—a 75% increase. For Tides DAFs privileged to hold assets of more than $1M at the start of last year, the aggregated “payout rate”—the percentage of assets disbursed as gifts—was a stunning 103%. Translation: some of our donors needed to refill their DAFs during the course of the year to keep up with the pace of giving. In all, an eye-popping 71% of our DAFs with assets above $1M as of January 1, 2020 gave away at least 10% of their total DAF assets through the course of the year.
These figures are all the more remarkable because critics of DAFs regularly point out that many donors let money sit for years in these tax-advantaged accounts without recommending distributions for their intended charitable use. Indeed, the law places no requirements on DAFs when it comes to payout thresholds—and the result is that charitable assets held in all United States DAF accounts have grown to more than $140 billion.
Making Giving Easy
At Tides, we know those funds make a huge difference in strengthening and supporting the nonprofits and movements working heroically—and often on shoestring budgets—to address the intersecting crises we face. That’s why we’ve issued numerous appeals this past year for donors to “Get Off Your Assets.” It’s also why we’ve provided our DAF holders and other donors with a steady flow of ideas about how our philanthropic partners can best support the fight for racial justice, COVID-19 response, and efforts to advance and defend the voting rights of communities of color, young people, and other underrepresented communities.
In May, Tides officially signed onto the Charitable Crisis Commitment.
Through Tides pooled funds, rapid-response grantmaking programs, and other vehicles, we’ve tried to make it as easy as possible for donors to recommend grants in ways that have real impact. Examples of Tides funds that support organizing and action on critical issues right now are the Healthy Democracy Fund, the Women’s Environmental Leadership Fund (WE LEAD), the Advancing Girls Initiative, and the Stronger Together COVID-19 Response Fund. Our hands-on, values-aligned approach that prioritizes granting money to the field sets the standard in a crowded and often profit-driven DAF marketplace, where Assets Under Management (AUM) seem to be a higher priority than grantmaking.
It was largely in response to the growth in DAFs and the lack of payout requirements that Alan Davis, director of the WhyNot Initiative and president of the Leonard and Sophie Davis Fund, launched the Charitable Crisis Commitment in 2020. Through this initiative, he has succeeded in securing commitments from a diverse group of foundations and individual donors to give above and beyond what the law requires in the face of today’s crises. The commitment encourages most foundations to give 6 percent of assets (compared to their legal payout rate of 5 percent), and DAF holders to give 10 percent of their fund balances or $100,000, whichever is greater, each year. In May, Tides officially signed onto the commitment ourselves, and we’re encouraging our individual DAF holders who meet the fund balance threshold (about 50 funds in total) to sign on as well.
An active Tides partner and donor, Davis told us why he created the Crisis Charitable Commitment. “The crisis has not gone away, and will not go away any time soon, even with government bailouts. The donor community can afford to dig deeper and help bring the nonprofit sector back to life.”
The donor community can afford to dig deeper and help bring the nonprofit sector back to life.
Another advocate for increased giving for DAFs is Tides Founder Drummond Pike. In a recent article in The Sacramento Bee with impact investor and Tides partner Kat Taylor, Pike noted that DAFs were “activating a relatively small amount of assets” in response to the COVID-19 crisis. The article added that DAF funds “could underwrite the ability of our most effective nonprofits to come to society’s aid in its time of greatest need.”
We could not agree more. That’s why Tides is continuing to work with our donors to grant DAF monies to urgent causes. After all, it’s not as if the crises we faced during 2020 abated as we moved into 2021. Communities of color continue to struggle disproportionately with police violence and the aftershocks of the COVID-19 crisis. Lawmakers and powerful interests continue their determined efforts to suppress the votes and the voices of underrepresented communities. And people across the U.S. and around the world continue to face the ever-increasing impacts of the climate crisis.
On the positive side, nonprofit organizations in communities across the country continue to work day in and day out to find solutions to these and other urgent issues. And it’s because of their work that voters of color and young voters turned out in record numbers, that immigrant communities received life-saving direct assistance at the border and across the country, and that frontline community had the resources they needed to thwart some of the dirtiest and dangerous fossil fuel projects ever proposed. These communities need—and deserve—more support.
Many thanks to Tides donor partners for truly stepping up in the past year. We look forward to continuing our important work together through 2021 and beyond.