The need for biblically responsible investing with donor advised funds.
There’s a growing movement towards biblically responsible investing. As people realize that their investments have been going towards businesses that support unbiblical practices such as abortion, pornography or human trafficking, they are saying “No more.” Instead, to ensure that their investment decisions line up with their faith and values, they are switching tracks and turning towards an alternative: biblically responsible investing.
At the same time, the donor advised fund world is also exploding. According to National Philanthropic Trust’s “2017 Donor Advised Fund Report,” donor advised funds house over $85 billion in assets. They have shown steady growth as a charitable vehicle, increasing from 2016 to 2017 by 10 percent. Giving USA reports donor advised funds as “the fastest growing vehicle in philanthropy,” listing their growth rate as “three times the rate of total charitable giving in 2016.”
Here’s how a donor advised fund works: Joe Smith puts money in his donor advised fund and instantly receives a tax write-off. But the money can sit in his fund for years to come. It grows in investments until Joe Smith is ready to send out a grant from his DAF to a charity.
Essentially, donor advised funds are the next big thing in charity.
Donor advised funds provide a win-win solution for both charities and donors. The donor gets the tax benefit of an income tax deduction the same year the gift is given. But once the money is in the donor advised fund, it can grow in investments for as long as the donor chooses. In the end, more money goes out to charity, since the donor advised fund allowed the gift to grow over time.
Donor advised funds are an excellent solution for strategic generosity. However, between biblically responsible investing and donor advised funds, there lies a gap.
When it comes to personal finances, people of faith are turning towards biblically responsible investing. But what about their donor advised funds? Are they being equally careful with the money that has technically already been “gifted” but is still under their management through a donor advised fund?
I did a quick Google search and could not find a single donor advised fund sponsor who practiced biblically responsible investing. Not to say they don’t exist; I just couldn’t find any.
Here Christians were—being so careful to invest their personal finances using biblically responsible investing. But when they wanted to give to charity, no donor advised fund option allowed for the same amount of care. There was nowhere the money would be biblically invested. Something had to change. So we started The Signatry.
As a Christian, God calls us to be charitable. He also calls us to be wise.
There seems to be a disconnect. When we make investments for our personal gain, we make sure they’re invested responsibly. But when our money is already dedicated towards charity (as in a donor advised fund), we don’t question the investments.
At The Signatry, we don’t think that makes any sense. First off, all of our resources belong to God. As Psalm 24:1 states, “The Earth is the Lord’s and everything in it; the world, and all who live in it.” Since everything belongs to God, we are simply God’s caretakers, responsible to account for everything he’s given us.
If the money in a donor advised fund is dedicated towards making a difference for the Kingdom, then even before it is granted out, that money should already be making a difference. Or at the very least, it should not be invested in causes that are blatantly against biblical values.
Second, most faith-based foundations have standards for which charities receive their grants. Each charity is vetted through strict compliance measures to ensure they qualify as a grant recipient. Now, does it make any sense to have strict standards for the receiving ministries, but not to have the same standards for investments?
As far as I can tell, The Signatry is the only Christian foundation offering investments that also comply with Christian values. This shouldn’t be the case. We are hopeful that one day biblically responsibly invested donor advised funds will be the norm, not the exception.
Let’s start a movement of Christians who are biblically minded, not just in their personal finances but also in their charitable contributions. Let’s make sure every dollar is used ethically—from the first investment to the last check sent to a ministry.