5 Questions for...Vic De Luca, President, Jesse Smith Noyes Foundation
June 23, 2015
The Jesse Smith Noyes Foundation was established in 1947 by Charles Noyes, a real estate developer in Manhattan, in honor of his wife, Jessie Smith, herself a women's suffrage and civil rights activist. Initially, Noyes set up the foundation to provide scholarships, with half earmarked for non-white students. In the 1990s, the family decided to change course and began to provide funding more directly to organizations working on issues in which they had an interest. Today, most of its support goes to grassroots organizations and movements in the United States working "to change environmental, social, economic, and political conditions to bring about a more just, equitable, and sustainable world."
Recently, PND chatted with Vic De Luca, who joined the foundation in 1991 and has been its president since 2000, about its donor-advised campaign, a new initiative aimed at convincing donors to make more timely allocations from their donor-advised funds.
Philanthropy News Digest: The Noyes Foundation recently launched a campaign around the timely distribution of monies from donor-advised funds. Why is the distribution of funds from DAFs suddenly an issue?
Vic De Luca: Donor-advised funds have been around a long time, administered in many cases by community foundations, but they started to become really popular among donors in the 1990s after mutual fund companies like Fidelity and Vanguard began to offer them, and by the early 2000s their popularity was off the charts. One of the reasons for their popularity is that contributions to a donor-advised fund qualify for an immediate tax deduction, while donors have complete say over how those tax-advantaged dollars are allocated. In other words, you're allowed to transfer funds from your own personal account at Fidelity or Vanguard to a public charity, and then at some point in the future you get to "advise" that public charity as to where those dollars should go. It's a simple process. You just contact the fund-holder, answer some questions, and make a contribution; it can be a one-time contribution, or you can choose to contribute on a regular basis. And you can make disbursements from the fund at any time, or not at all.
PND: What part of that equation does your campaign address?
VDL: We're not saying donor-advised funds are good or bad; we're saying the current system is broken, in that it allows an individual donor to take an immediate tax deduction but does not insist on a corresponding responsibility to put those dollars to work for public benefit in a timely fashion, which is something we'd like to see. We think donors should be encouraged to give, and what we're trying to do is to say to individuals who have donor-advised funds, "Look, you've made your contribution to this public charity, you've gotten your tax deduction, don't let that money sit there, let's put it to good use." We think the money sitting in donor-advised funds is an untapped resource that could and should be used to deal with some of the pressing problems of the day. And we can help donors who share our social justice concerns do that.
VDL: I would say, "Let's not argue." We're not saying donor-advised funds shouldn't be allowed to exist. In fact, I think they're a positive, in that they make it easy for individuals to increase their charitable giving. Any time you can create incentives for people to give more, that's a good thing. What I would say, however, is that the fastest-growing instrument for giving in America today is the donor-advised fund. There are almost two hundred and twenty-two thousand of them, compared to something like eighty thousand foundations. So, clearly, they are popular. But let's not ignore the fact that there is something like $50 billion in tax-advantaged dollars in those donor-advised funds, and we think there can and should be more of an emphasis on getting those dollars out the door. We're not advocating for an end to the system; we're saying we need to make a course correction and get those dollars out the door faster.
PND: Would you support federally mandated payout rules for donor-advised funds to help get those dollars out the door faster?
VDL: Private foundations are subject to a five percent payout requirement – that's something we all understand and have gotten used to. I'm not sure we need to have a similar requirement for donor-advised funds at this point, although I do think the donor-advised fund community creates a problem for itself when it refuses to recognize that there are concerns floating around about payout. The idea that the folks who administer donor-advised funds can just put their head in the sand or, even worse, draw a line in the sand and say, "You can't touch our donor-advised funds," is not something we should be encouraging. Ultimately, that approach will lead to greater regulation, in my view. But, as I said, at this point I don't think donor-advised funds need to be more tightly regulated. I just think we need to develop a more coordinated approach to getting the money spent in a timely fashion.
PND: Have you and your colleagues created any measures of success for the campaign?
VDL: Well, this is all about partnership, so we're looking for dance partners – that will be one measure of our success. In fact, by 2020, we hope to be working with partners who, collectively, are making disbursements totaling a million dollars a year.
Let me be clear about one thing: This is not a way to boost the assets of the Noyes Foundation. Donor-advised funds are not permitted to go to a foundation, because those funds have already qualified for a deduction; they can only be disbursed to charitable organizations. What we're trying to do is very simple. If you're one of our partners, you would give us a dollar amount as to how much you'd like to contribute, and then we would recommend a certain number of organizations to you. If you’re concerned about sustainable food and farming issues, for example, and had a particular interest in a certain region of the country or a particular aspect of the food system, we would work with you to identify organizations we think are doing critical work in that region or on that issue, and then it would be up to you to go back to your donor-advised fund administrator and make the grant. The only thing we would ask is that you identify the grant as being made in partnership with the Noyes Foundation. So I wouldn't say we have a target or maximum number of partners in mind. We can handle the million dollars, growing it a few hundred thousand dollars a year, which would probably mean adding four or five partners a year.
At the end of the day, we want donors to take advantage of our knowledge, our experience, our collective skill set to make better contributions from their donor-advised funds. We see ourselves as a resource, and our ultimate goal is to help steer more money into social justice work and to help people who need help. Letting $50 billion sit around not doing much of anything is not the way to do that. If we can help get that money into circulation, to nonprofits that are making a difference – and we know who some of those groups are – well, the world will be a better place for it.
– Mitch Nauffts