Originally introduced by community foundations, donor-advised funds (DAFs) have become extremely popular with US donors in recent years and are now also sponsored by financial institutions such as Fidelity.[1] According to Emmett Carson, President and CEO of the Minneapolis Foundation, the success of DAFs sponsored by financial institutions is to blame for an ‘identity crisis’ among US community foundations. However, some community foundations are turning this challenge into an opportunity to reposition themselves and to develop their unique role as intermediaries between donors and the community.

This article highlights two approaches to this challenge – a collaboration between 42 community foundations and the financial management company Merrill Lynch, and a renewed focus on donor education that establishes close links with donors and helps them to shape their own giving plans – and analyses some of the obstacles community foundations will have to overcome in the face of the success of DAFs sponsored by financial institutions.