Donor Advised Funds: What Can North America Learn From the Australian Approach?

AuthorIan Murray
PositionAssociate Professor, UWA Law School, University of Western Australia
Donor Advised Funds: What Can
North America Learn From the
Australian Approach?
Ian Murray*
Charity law is a public and private hybrid that seeks to balance donor intent with
the achievement of public benef‌it. In supporting that balance, regulatory frameworks
typically intrude less on donor intent when the recipient charity is a publicly controlled
charity, rather than a private foundation. is approach is challenged by the rise of donor
advised funds — public charity intermediaries that behave in many ways like privately
controlled foundations. e rise has been particularly marked in the United States, but
is also apparent in Canada and Australia. Pertinently, while Australia took many years
to regulate private foundations, it shortly afterwards also introduced specif‌ic rules for
public charitable foundations. is article therefore examines whether the United States
and Canada can draw guidance from Australia’s experience in dealing with donor
advised funds, especially in relation to delay in distributions and conf‌licts of interest.
* Associate Professor of University of Western Australia. Deputy Head of
School — Research, Faculty of Arts, Business, Law and Education, Law
School, Dr. BSc LLB W Aust, LLM (Taxation) NSW, PhD Tas. ORCID
0000-0001-7896-3550. Many thanks to Tayu Wilker for invaluable
research assistance and commentary.
(2020) 6 CJCCL
I. I
II. D A F
A. e Characteristics of DAFs
B. Advantages
C. Disadvantages
1. Delay
2. Conf‌licts of Interest
3. Transparency and Accountability
III. T A C
A. Regulation of the Charity Sector
B. Ancillary Funds
C. DAFs or “Sub-funds”
IV. A   A R  M H A DAF P
A. Dealing with Delay in Distributions/Public Benef‌it
1. Minimum Distribution Requirements
2. No Circular Distributions to Other Philanthropic
B. Addressing Conf‌licts of Interest
V. C
I. Introduction
Charity law is a hybrid of private and public law.1 Unlike private
law’s starting position of freedom, public law typically requires
that actions be justif‌ied by some positive law, and so unfettered donor
freedom is not an appropriate frame of reference.2 After all, charity law
itself comprises a framework of rights and obligations that a donor/creator
selects when creating a charity. at framework ref‌lects a tension between
respecting donor and charity controller intent and overriding donor/
1. See generally Kathryn Chan, e Public-Private Nature of Charity Law
(Oxford: Hart Publishing, 2016).
2. Ibid at 11.
Murray, Donor Advised Funds
charity controller intent to achieve a greater or fairer public benef‌it.3 e
framework of rights and obligations is usually more supportive of donors
when it is a publicly controlled charity to which they donate, rather than
a privately controlled charity. However, recent times have seen the rise,
in the United States, Canada, Australia and other jurisdictions of public
charities acting like private foundations, such as donor advised funds
is article examines the issue of privately inf‌luenced public charities
in the form of DAF sponsors. It does so by asking what the United States
and Canada can learn from Australia’s approach to dealing with public
charity philanthropic intermediaries. Although Australia took more than
50 years longer than the United States to introduce a specif‌ic regulatory
regime for private charitable foundations, it relatively swiftly followed
this step with rules for public charity intermediaries modelled on those
applying to private foundations.
To identify focal areas in which the Australian rules might help,
as well as limits based on dif‌fering circumstances, Part II sketches the
current nature and trajectory of DAFs in the United States and Canada
and examines key problems that have emerged. Part III describes the
Australian regulation of public charity intermediaries and of DAFs in
particular. Aspects of the Australian regime are then considered in Part
IV as potential methods to address the key issues of delay in distributions
and achievement of public benef‌it, and of conf‌licts of interest. Part V
3. In the context of cy-près, see Mark Ascher, Austin Wakeman Scott &
William Fratcher, Scott and Ascher on Trusts, 5d (New York: Aspen
Publishers, 2006) at §§ 39.5, 39.5.4; UK, Report of the Committee on the
Law and Practice Relating to Charitable Trusts, Cmd 8710 (1952) at 16-7,
23-28, 75 (Lord Nathan). More broadly, see ibid at 12-13.

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