Giant mutual funds are aggressively courting charitable donors in competition with community foundations and other traditional charities, raising concerns about their impact on philanthropy, The New York Times reported Jan. 21.
The Fidelity Investments Charitable Gift Fund, for example, has $2.5 billion in assets from more than 22,000 donors, prompting Schwab, T. Rowe Price and many other financial institutions to launch similar donor-advised funds.
Competition from mutual-fund firms hasn’t hurt the nearly 600 community foundations in the U.S., which with other charities have thrived in the economic boom of the 1990s, the Times said.
But the slackening of the economy may prompt donors to be more cautious, the Times said, while community foundations may find it tough to attract donors in the face of aggressive marketing by a growing number of commercial donor-advised funds.
Recognizing they trail the mutual funds in marketing and technology prowess, community foundations are beginning to be more aggressive.
“This is a moment in time when the line between not-for-profit and for-profit is becoming much more blurred,” Charles Halpern, scholar in residence at New York University Law School, told the Times.
Albert Rodriguez, a Los Angeles lawyer who represents nonprofit groups, told the Times that Fidelity should not have a tax exemption as a public charity because the company is not organized for a charitable purpose.
Cynthia Egan, president of the Fidelity Charitable Gift Fund, said the fund’s mission “has been to get more people involved in organized giving, creating more charitable dollars, and we’re thrilled with our results.”
And Sara Engelhardt, president of the Foundation Center, told the Times that donor-advised funds – whether for-profit or nonprofit, are an important and growing source of charitable dollars.
“The good news is that with all the different choices, donor-advised funds are attracting a lot of new money for philanthropy,” she said.
For full story, go to The New York Times.