Donor-advised funds help food banks serve those in need

Funviralpark 1 year ago 0 3

As we approach the end of the year, nonprofits across Chicago will receive more donations this month than at any other time of the year. Inspired by the spirit of the holiday season, donors are encouraged to donate to charities that serve those most affected by the ongoing economic downturn, such as the Northern Illinois Food Bank, of which I am President and CEO. I am choosing. My organization provides families with nutritious food to meet their growing needs for groceries, fuel, utilities, and more.

Charities rely on year-end giving as a key opportunity to connect with supporters and secure critical funding dollars for their mission. However, unlike the holiday season, hunger has no seasons. Working families and others most affected by the pandemic have been struggling all year round to bounce back from the financial hardships of the past two years.

Inflation and rising costs are causing neighbors to turn to Northern Illinois Food Bank food pantries and programs at historically high rates. In fact, food banks served an average of 450,000 neighbors per month in 13 county service areas over the past three months. That’s a 55% increase from pre-pandemic levels and a 40% increase over the same quarter last year.

Ongoing changes to Internal Revenue Service rules governing charitable donations, deductions and itemization have left many prospective donors confused and wondering how they can help meet their charitable needs or the needs of the charitable organizations they wish to support. We are often unaware of providing the means to help us meet.

Each year, nonprofits, including Northern Illinois Food Bank, receive generous donations from Donor Advised Funds (DAF). A DAF is a charitable donor investment account managed by a philanthropic sponsor such as Fidelity, Charles Schwab, Community Foundation, or other financial investment institution that receives tax credits when donors fund the account. can do. charities of their choice. Northern Illinois Food Bank was a beneficiary of more than $2.4 million from DAF last year.

2022 DAF assets increased from $167 billion in 2020 to $234 billion in 2021, according to the National Philanthropic Trust. There are 1.3 million of his DAF accounts in the US, and the average size of these accounts will increase to $183,000 in 2021. In a market downturn, this could be a huge gift to charity.

Unlike traditional private foundations, DAF has no annual distribution requirements. In many cases, the funds accumulated in the DAF sit indefinitely without being acted upon by charities to help those most in need.

Earlier this year, a federal bill known as the Advancement of Charity Act (ACE) was introduced into the House of Representatives after being introduced by the Senate last year. The ACE Act included changes to tax law that required the DAF to pay charitable funds to active charitable organizations more quickly. But in today’s politically divided environment, the ACE Act and other laws designed to facilitate DAF funding to charities are stalled in the Capitol.

Many individuals who donate to charity through the DAF may hold onto their assets until they can “do what is best” or make a big impact with their donation. We argue that we need to infuse these gifts into our communities, and billions of dollars in DAF could soon be used by charities serving communities in Illinois. This includes our charities that address the growing number of food-insecure neighbors.

We urge everyone with DAF to think beyond vacation and talk now with their financial advisors and family members by planning regular DAF grants to community charities they trust. We encourage you to extend your generosity. neighbor.

Julie Yurko is the President and CEO of Northern Illinois Food Bank.

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