Philanthropic impact investors give power to the people
ImpactAlpha describes how investors are using DAFs to return power and decision-making authority to communities.
A rethinking of power dynamics has begun to shape impact investment options for the capital in donor-advised funds (DAFs). For her story on the trend in ImpactAlpha, Meg Massey interviewed Kelley Buhles about RSF’s work to expand the boundaries of participatory grantmaking with community-led funding and other structures that cede control over grantmaking decisions to grassroots organizers, nonprofit leaders, and other members of affected communities.
How impact investors are using donor-advised funds to shift power to the people — and communities
by Meg Massey
Impact investing, like most investing and even philanthropy, tends to vest power in the hands of those with the capital, who can dictate when and how financing flows to enterprises and nonprofits. Now, some investors are using donor-advised funds to shift at least some power and decision-making authority to affected communities.
Donor-advised funds are treated as a tax-deductible charitable donation to a sponsoring organization. The donor can then use capital to make grants to nonprofits or community foundations of any amount, on whatever schedule they wish. In the last few years, their popularity has soared: there are now over 728,000 individual DAFs across the U.S., with assets totaling more than $121 billion.
In recent years, financial service providers and investment platforms have rolled out impact investment options for the capital sitting in DAFs. A rethinking of power dynamics has begun to reshape those offerings and the donor’s grantmaking strategy.
Read the full story.
