{"id":4402231129793,"date":"2025-09-23T13:28:44","date_gmt":"2025-09-23T13:28:44","guid":{"rendered":"https:\/\/www.philanthropy.com\/isdvtvlkwlsu\/"},"modified":"2025-10-18T23:04:48","modified_gmt":"2025-10-19T03:04:48","slug":"crypto-philanthropy-and-donor-advised-funds-are-not-immune-to-problems-here-are-some-red-flags","status":"publish","type":"post","link":"https:\/\/www.philanthropy.com\/solutions\/crypto-philanthropy-and-donor-advised-funds-are-not-immune-to-problems-here-are-some-red-flags\/","title":{"rendered":"Crypto-Philanthropy and Donor-Advised Funds Are Not Immune to Problems. Here Are Some Red Flags."},"content":{"rendered":"<div class=\"ArticlePage-articleContainer\">\n<div class=\"ArticlePage-articleBody contentBody\">\n<!--BrightspotCmsObjectBegin {\"id\":\"00000199-2f96-db9c-a1ff-ffdfc3d00000\",\"typeLabel\":\"Rich Text\"}--><\/p>\n<div class=\"RichTextArticleBody\">\n<div class=\"RichTextArticleBody-body RichTextBody\">\n<p>Donor-advised funds are wildly popular, with <!--BrightspotCmsObjectBegin {\"id\":\"00000199-72e1-d724-a7db-fbff05eb0000\",\"typeLabel\":\"Link\"}--><!--BrightspotCmsObjectBegin {\"id\":\"00000199-72e1-d724-a7db-fbff05eb0000\",\"typeLabel\":\"Link\"}--><a class=\"Link\" href=\"https:\/\/www.philanthropy.com\/article\/daf-assets-250-billion-and-counting\">total DAF assets standing at $250 billion<\/a><!--BrightspotCmsObjectEnd--><!--BrightspotCmsObjectEnd-->, according to the latest analysis from the National Philanthropic Trust. And by <!--BrightspotCmsObjectBegin {\"id\":\"00000199-4ee3-dbf5-a1bd-7ef75f740000\",\"typeLabel\":\"Link\"}--><!--BrightspotCmsObjectBegin {\"id\":\"00000199-4ee3-dbf5-a1bd-7ef75f740000\",\"typeLabel\":\"Link\"}--><a class=\"Link\" href=\"https:\/\/thegivingblock.com\/annual-report\/\" target=\"_blank\">one count<\/a><!--BrightspotCmsObjectEnd--><!--BrightspotCmsObjectEnd-->, gifts in cryptocurrency exceeded $1 billion last year.<\/p>\n<p><!--BrightspotCmsObjectBegin {\"id\":\"00000199-4ecd-de58-a9fd-cfdf06580000\",\"typeLabel\":\"Module\"}--><\/p>\n<div class=\"Enhancement\" data-align-right=\"\">\n<div class=\"Enhancement-item\"><!--BrightspotCmsObjectBegin {\"id\":\"00000199-4ecd-de58-a9fd-cfdf06580000\",\"typeLabel\":\"Module\"}--><br \/>\n<!--BrightspotCmsObjectBegin {\"id\":\"00000199-4ecd-de58-a9fd-cfdf06730004\",\"typeLabel\":\"List\"}--><\/p>\n<div class=\"ListB\">\n<div class=\"ListB-header\">\n<h2 class=\"ListB-header-title\">More on DAFs<\/h2>\n<\/div>\n<div class=\"ListB-items-first\">\n<div class=\"PromoC\" data-content-type=\"article\">\n<div class=\"PromoC-media\">\n<a class=\"Link\" href=\"https:\/\/www.philanthropy.com\/article\/donors-say-they-were-ghosted-by-a-10-billion-daf\"><!--BrightspotCmsObjectBegin {\"id\":\"00000199-5911-de58-a9fd-d9dff3360000\",\"typeLabel\":\"Image\"}--><\/p>\n<p><img decoding=\"async\" alt=\"The gold dome of the Georgia State Capitol gleams in the sun in front of the skyline of downtown Atlanta, Ga., Saturday, Aug. 27, 2022.\" class=\"Image\" data-src=\"\/wp-content\/uploads\/2025\/10\/news-danielssdgmain-0918-ap25094512737724.jpg\" loading=\"lazy\" src=\"\/wp-content\/uploads\/2025\/10\/news-danielssdgmain-0918-ap25094512737724.jpg\" \/><br \/>\n<!--BrightspotCmsObjectEnd--><br \/>\n<\/a>\n<\/div>\n<div class=\"PromoC-content\">\n<\/div>\n<\/div>\n<\/div>\n<ol class=\"ListB-items\">\n<li class=\"ListB-items-item\">\n<div class=\"PromoC\" data-content-type=\"article\" data-no-media=\"\">\n<div class=\"PromoC-content\">\n<div class=\"PromoC-kicker\">\n                Donor-Advised Funds\n            <\/div>\n<h3 class=\"PromoC-title\">\n<a class=\"Link\" href=\"https:\/\/www.philanthropy.com\/article\/donors-say-they-were-ghosted-by-a-10-billion-daf\">Donors Say They Were Ghosted by a $10 Billion DAF<\/a><br \/>\n<\/h3>\n<\/div>\n<\/div>\n<\/li>\n<li class=\"ListB-items-item\">\n<div class=\"PromoC\" data-content-type=\"article\" data-no-media=\"\">\n<div class=\"PromoC-content\">\n<div class=\"PromoC-kicker\">\n                Fundraising\n            <\/div>\n<h3 class=\"PromoC-title\">\n<a class=\"Link\" href=\"https:\/\/www.philanthropy.com\/article\/daf-assets-250-billion-and-counting\">DAF Assets: $250 Billion, and Counting<\/a><br \/>\n<\/h3>\n<\/div>\n<\/div>\n<\/li>\n<li class=\"ListB-items-item\">\n<div class=\"PromoC\" data-content-type=\"article\" data-no-media=\"\">\n<div class=\"PromoC-content\">\n<div class=\"PromoC-kicker\">\n                Giving\n            <\/div>\n<h3 class=\"PromoC-title\">\n<a class=\"Link\" href=\"https:\/\/www.philanthropy.com\/article\/a-short-history-of-the-fast-and-furious-rise-of-dafs\">A Short History of the Fast and Furious Rise of DAFs<\/a><br \/>\n<\/h3>\n<\/div>\n<\/div>\n<\/li>\n<li class=\"ListB-items-item\">\n<div class=\"PromoC\" data-content-type=\"article\" data-no-media=\"\">\n<div class=\"PromoC-content\">\n<div class=\"PromoC-kicker\">\n                Advice\n            <\/div>\n<h3 class=\"PromoC-title\">\n<a class=\"Link\" href=\"https:\/\/www.philanthropy.com\/article\/getting-anonymous-daf-donations-7-things-to-do\">Getting Anonymous DAF Donations? 7 Things to Do<\/a><br \/>\n<\/h3>\n<\/div>\n<\/div>\n<\/li>\n<\/ol>\n<\/div>\n<p><!--BrightspotCmsObjectEnd--><!--BrightspotCmsObjectEnd-->\n<\/div>\n<\/div>\n<p><!--BrightspotCmsObjectEnd--><\/p>\n<p>But many don\u2019t know that when a donor places money \u2014 or any kind of asset, like stock or crypto \u2014 in a DAF and gets an immediate tax break, they also relinquish control of those assets. Though in most cases, DAFs parcel grants to charities at the donor\u2019s request. <\/p>\n<p>While legally controlled by the sponsoring organization, the billions of dollars in grants each year made from donor-advised funds are based on trust, specifically the donor\u2019s trust that the sponsoring organization will do their bidding.<\/p>\n<p>Robbie Heeger, president of Endaoment, a blockchain-based philanthropy platform and donor-advised fund, warns donors to take great care when entrusting cash \u2014 or crypto \u2014 to any third party and to do regular due diligence. <\/p>\n<p>\u201cThere\u2019s a whole laundry list of good philanthropic hygiene that we have come to think of as a given, but is really important to analyze with new asset classes,\u201d he said. \u201cPhilanthropy in the digital asset space is quite similar to philanthropy in the traditional asset space.\u201d<\/p>\n<p><!--BrightspotCmsObjectBegin {\"id\":\"00000199-fa6d-d0a8-adff-fb6f0cd80001\",\"typeLabel\":\"Module\"}--><\/p>\n<div class=\"Enhancement\" data-align-center=\"\">\n<div class=\"Enhancement-item\"><!--BrightspotCmsObjectBegin {\"id\":\"00000199-fa6d-d0a8-adff-fb6f0cd80001\",\"typeLabel\":\"Module\"}--><br \/>\n<!--BrightspotCmsObjectBegin {\"id\":\"00000171-beba-d66a-a177-bffb161f0000\",\"typeLabel\":\"DFP Ad\"}--><\/p>\n<div class=\"GoogleDfpAd-container\">\n<div class=\"GoogleDfpAd-label\">ADVERTISEMENT<\/div>\n<div class=\"GoogleDfpAd\" data-lazy-load=\"\" data-slot-adsizemap=\"[[[992, 0], [728, 90], [300, 250]], [[0, 0], [300, 250]]]\" data-slot-pagetype=\"article\" data-slot-sizes=\"[[728, 90], [300, 250]]\" data-slot-tile=\"1\" data-timed-refresh=\"true\" id=\"googleAd0281f0fd-f0bd-4d62-ba7b-974efa7e0581\">\n<span class=\"GoogleDfpAd-placeholder\"><\/span>\n<\/div>\n<\/div>\n<p><!--BrightspotCmsObjectEnd--><!--BrightspotCmsObjectEnd-->\n<\/div>\n<\/div>\n<p><!--BrightspotCmsObjectEnd--><\/p>\n<p>Below are some tips from donor-advised fund and crypto-philanthropy experts about how to ensure your philanthropy goes as planned.<\/p>\n<p><b>Giving it up.<\/b> Remember, when donating through a DAF, you are legally ceding control over the funds. So if things go sideways with the fund, it can be difficult, if not impossible, to get the money back, as the donor does not own the donation anymore. <\/p>\n<p><b>Fees matter.<\/b> Be wary of a donor-advised fund that asks for a relatively large commission up front, but then doesn\u2019t have annually recurring management fees. Those annual management fees may seem onerous or unnecessary, but they help ensure that the fund will make good on your grant requests, said Melodie Gatz, president of Legacy Global, a donor-advised fund sponsor.<\/p>\n<p><b>Remember, it\u2019s charity<\/b>. Watch out for solicitations that are framed as investment opportunities. While it is a common practice for donors to be asked to make matching gifts, it is unusual for a DAF to request that a donor front money with the assurance that it will grow by a specified amount. And while it is permissible to make a loan from a donor-advised fund, the goal of the loan must be charitable, said Gene Takagi, a principal at the NEO Law Group, which specializes in issues related to nonprofits. \u201cPromising an investment return would be highly problematic.\u201d <\/p>\n<p><b>Investment policies are the norm.<\/b> Make sure that a donor-advised fund or crypto-philanthropy has an investment policy agreed to by its board that spells out the risks the fund is willing to take and the types of investment vehicles it will use. Sometimes investments go sour, but if they do, clear guidelines let donors know how the money will be invested. Elieen Heisman, the former long-time president of the National Philanthropic Trust, a large donor-advised fund sponsor, said she frequently received pitches from investors looking to pool money from the Trust\u2019s DAF account for an investment scheme. Those pitches sent up red flags, she said, when the focus was on generating a big return rather than putting the money to charitable use. \u201cMoney sitting in donor-advised fund accounts are sacred funds,\u201d Heisman said.<\/p>\n<p><!--BrightspotCmsObjectBegin {\"id\":\"00000199-fa6d-d0a8-adff-fb6f0cd80002\",\"typeLabel\":\"Module\"}--><\/p>\n<div class=\"Enhancement\" data-align-center=\"\">\n<div class=\"Enhancement-item\"><!--BrightspotCmsObjectBegin {\"id\":\"00000199-fa6d-d0a8-adff-fb6f0cd80002\",\"typeLabel\":\"Module\"}--><br \/>\n<!--BrightspotCmsObjectBegin {\"id\":\"00000171-beba-d66a-a177-bffb161f0000\",\"typeLabel\":\"DFP Ad\"}--><\/p>\n<div class=\"GoogleDfpAd-container\">\n<div class=\"GoogleDfpAd-label\">ADVERTISEMENT<\/div>\n<div class=\"GoogleDfpAd\" data-lazy-load=\"\" data-slot-adsizemap=\"[[[992, 0], [728, 90], [300, 250]], [[0, 0], [300, 250]]]\" data-slot-pagetype=\"article\" data-slot-sizes=\"[[728, 90], [300, 250]]\" data-slot-tile=\"2\" data-timed-refresh=\"true\" id=\"googleAd8c90f3b4-cdf6-42e3-b151-9d6de1a07f8b\">\n<span class=\"GoogleDfpAd-placeholder\"><\/span>\n<\/div>\n<\/div>\n<p><!--BrightspotCmsObjectEnd--><!--BrightspotCmsObjectEnd-->\n<\/div>\n<\/div>\n<p><!--BrightspotCmsObjectEnd--><\/p>\n<p><b>Lawyer up.<\/b> For all big transactions, consult a lawyer. IRS rules are complicated, and every situation is different. Having a lawyer look for potential problems is a must. <\/p>\n<p><b>Paper trail.<\/b> Consider carefully whether you want to make a donation to a group that has not filed a 990 in several consecutive years. Not filling the required IRS paperwork can happen, said Brian Mittendorf, a nonprofit tax professor at the Ohio State University. But if a donor-advised fund skips several years, beware.<\/p>\n<p><b>Tracking crypto.<\/b> Many nonprofits are building the staff knowledge to determine whether potential crypto partners are legitimate. Unlike cash scams, some crypto scams use a charity\u2019s name on a digital platform to fraudulently solicit funds. To prevent internal fraud and external attacks, grantees need to be skilled in assessing a fund\u2019s digital credentials. \u201cYou want to make sure you are partnering with legitimate organizations that you want to associate your brand with,\u201d said Ilan Wallentin, senior manager of Philanthropy Special Projects at GiveDirectly, a nonprofit that allows donors to give cash and crypto to recipients directly, rather than to a nonprofit that provides goods and services to beneficiaries. <\/p>\n<p><b>Do research.<\/b> Due diligence doesn\u2019t just mean googling the organization and looking at their financials, Wallentin said. If there\u2019s an intended charity or cause that you\u2019re looking to support, you can also reach out to that charity to ask if they\u2019ve worked with the DAF in question. <\/p>\n<p><b>Get a full view.<\/b> When dealing with crypto investments, see how transparent the funds are beyond what is required in the IRS 990 form. You should know where your assets are sitting, what their current value is, how they are liquidated. Crypto-philanthropy can afford donors a complete, accurate view into the management of their funds through an auditable, transparent, immutable record of the transactions made through the blockchain, Heeger said. <\/p>\n<\/div>\n<\/div>\n<p><!--BrightspotCmsObjectEnd-->\n<\/div>\n<\/div>\n<div class=\"ArticlePage-questionsConcerns\">\n<span><i>We welcome your thoughts and questions about this article. Please <a aria-labelledby=\"email the editors\" href=\"mailto:editormail@philanthropy.com\" role=\"link\">email the editors<\/a> or <a aria-labelledby=\"submit a letter to the editor\" href=\"mailto:letters@philanthropy.com\" role=\"link\">submit a letter<\/a> for publication.<\/i><\/span>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Due diligence is key for donors giving through new philanthropic vehicles.<\/p>\n","protected":false},"author":365113,"featured_media":4402231128101,"comment_status":"closed","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","cop_editorial_slug":"","cop_asana_id":"","editorial_asana_id":"","editorial_doc_id":"","footnotes":""},"categories":[81923],"issue":[],"profile":[],"role":[],"series":[],"topic":[191082],"coauthors":[189896],"class_list":{"0":"post-4402231129793","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","6":"hentry","7":"category-solutions","8":"topic-donor-advised-funds","10":"has-featured-image"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v26.9) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Crypto-Philanthropy and Donor-Advised Funds Are Not Immune to Problems. 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