When Se-ah-dom Edmo, executive director of Seeding Justice, first joined the foundation in 2019, the board made it clear that they wanted to change how the organization managed its donor-advised funds.

“One of my first conversations with our board was, ‘We’ve got to figure out what the heck we’re doing about DAFs – because the way we hold them is not mission-aligned’,” Edmo says.

In 2021, Seeding Justice announced a new strategy called Donor-in-Movement Funds. Any incoming dollars go through a “split”: 50 percent are allocated to a community-led participatory grantmaking committee to spend as they see fit. Another 40 percent remain under the donor’s control, to a point – after 12 months, the funds go through another split, discouraging the assets from being hoarded under Seeding Justice’s supervision.

Most of the conversation around DAF reform in the United States has revolved around federal regulations. But as foundation leaders wait to see how the political winds will shift, some have taken to self-regulating their DAF accounts to ensure they live up to standards of transparency, accountability and equity that current regulations don’t require.

For Edmo, the Donor-in-Movement Funds concept is a creative approach that helps Seeding Justice operationalize and demonstrate policies around faster payout rates and increased community control that some activists and even donors have called for.

Edmo has been calling on other foundations that control DAFs to join her in taking back control from donors. It’s a call that has been echoed by other foundation leaders and philanthropy critics, while still others argue that this kind of voluntary effort, while positive, can be a distraction from legislative reform.

“Many of the community foundations that we talk to feel that their hands are tied,” she says. “Typically, my response is, ‘Your hands are tied because you tied them. You write the contracts that individuals sign when they set up DAFs. You have the power to shift those contracts and to shift the business model.”

Taking Back Control

Another organization experimenting with self-regulation is the San Francisco-based fiscal sponsor Possibility Labs.

When Donna Daniels joined Possibility Labs as their new CEO in 2023, the organization was mulling over how to refine their DAF program. They came up with what Daniels calls the “redistribution DAF”, a model to accelerate the flow of transformative capital to BIPOC-led movements.

Their DAF model is designed to disburse at least 10% of a donor’s funds each year. The Possibility Labs team further incentivizes capital deployment by co-creating and executing a spend-down plan, which waives the annual fee. The model is being supported by organizational partner Kataly Foundation, which made an inaugural $20 million commitment.

“There are hundreds of billions of dollars locked up in DAFs and not moving at all to where money is needed, where resources—economic and non-economic—are needed,” Daniels said.  “We wanted to reimagine our DAF program to hue more closely to our mission.”

There are other examples of foundations working to speed along DAF dollars. Amalgamated Charitable Foundation was the first DAF provider to enact a 10% payout pledge, and that pledge has resulted in their payouts going out the door at four times the average national payout rate. Executive Director Anna Fink says that foundation has moved over $500 million to frontline organizations and social justice work in their first five years of operation.

“We measure our success and impact not by assets under management, which is sort of the standard in the industry, but what we call ‘assets under movement,’” Fink told me. “We believe that moving money quickly to the frontlines is a social justice value, so we prioritize moving resources through our platform with thoughtful urgency.”

That policy led to a partnership with the #HalfMyDAF campaign, according to Jen Risher, one of the campaign’s founders. "We're excited to partner with Amalgamated because of their values-aligned approach – they're all about moving money and we are too,” Risher says. “They're inserting urgency and inspiration into a system that needs both."

Finally, the Richmond Community Foundation, in California, allocates five percent of each DAF contribution to its Community Impact Fund, which allows the foundation to spend the money in the region as they see fit. President and CEO Jim Becker says that they also “work to make our DAFs expendable within 3 to 5 years so the donor and the community can create an impact now with larger gift amounts.”

From Self-Regulation to Policy Reform

One common theme when speaking to foundation leaders is that they see this as a temporary step while the debate rages around broader DAF reform.

"Efforts like Seeding Justice’s and Richmond’s can help put the community back in community foundations,” says Dan Petegorsky of Inequality.org. “At the same time only Congress can fix the design flaws that have made DAFs the vehicle of choice for the wealthiest donors and the wealth management industry."

Thaddeus Squires, founder and Chief Commons Steward of Social Impact Commons, agrees.“Self-regulation, or more equity-centered DAF sponsorship, is a start, but will only work with a certain minority of donors," he says. "In the end, our sector's ingrained cultural practice of bowing to donor control and interests will require the heavier hand of statute to start to shift the culture.”

Policy at the national level is far from static. The IRS and Department of Treasury only just proposed regulations seeking to further define DAF parameters last November, and they’re still in draft form. And a recent survey from The Giving Review and Inequality.org found that a strong majority of Americans support charity reform. Next year’s expiration of the Trump tax cuts are an opportunity for Congress to take action.

For Edmo, the same foundation leaders who are taking back control from donors also have a responsibility to push for reform on the federal level. 

“Right now the business model and the narrative around DAFs is that they serve as the charitable checkbook – so we have to figure out the other powerful narrative that's going to drive change,” she says. “My background is in organizing, so that’s how I approach this work: ‘What do we know about the audience that we’re trying to influence?’ We need to take lessons from other movements, like the Freedom to Marry campaign; we need to change hearts and minds.”