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

Charity law is a hybrid of private and public law. 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. After all, charity law itself comprises a framework of rights and obligations that a donor/creator selects when creating a charity and that framework reflects a tension between respecting donor and charity controller intent and overriding donor/charity controller intent to achieve a greater or fairer public benefit. The 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” (“DAF”s). This 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.