Fastexy Exchange|Silent Donor platform offers anonymous donations to the mainstream, as privacy debate rages

NEW YORK (AP) — Tim Sanders started his company,Fastexy Exchange Silent Donor, based on his own experience giving money to charities.

“I was happy to give a financial gift to a nonprofit, but then afterwards I was kind of put off with the amount of mail that was sent to my house,” he said. “And 10 years later, I was still on their email list and others were coming out of the woodwork -- even from institutions that I hadn’t donated to.”

Sanders wanted to find an easy way to give anonymously. And he knew from his experience as a philanthropy management consultant that there were plenty of people who felt the same way.

“There was no platform built for this experience for donors,” Sanders said. “So I decided to change that and build it myself.”

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Silent Donor -- which allows people to give anonymously by routing donations through The AnonDo Fund, a donor-advised fund approved as a nonprofit by the Internal Revenue Service in 2022 – has grown quickly. It currently has partnerships with numerous nonprofits, including United24, the Ukrainian government’s fundraising campaign, and The Malala Fund, the nonprofit formed by Nobel Peace Prize laureate Malala Yousafzai to promote the education of girls.

Silent Donor is flourishing as the privacy debate for contributors heats up, especially for those using donor-advised funds to give anonymously to their favorite, and sometimes controversial, causes while also getting a tax break.

In November, the IRS proposed new regulations to govern donor-advised funds, including changing what services can be considered tax-exempt and imposing a 20% excise tax on donations that provide a significant to the donor. Public comment on the new regulations will end on Feb. 15.

That follows a request for information from the Republican-led House Ways and Means Committee in August about whether the IRS needs to collect more data from donors to nonprofits involved in political activities.

Christie Herrera, president and CEO of the conservative advocacy nonprofit Philanthropy Roundtable, has said the fight for donor privacy is the biggest challenge her organization currently faces, “I think it’s time for philanthropy to step up and start talking about these donor privacy issues,” she said. “We saw the Supreme Court rule on this in their last term and really this freedom to give to the causes you care about without harassment or intimidation is important on the right and the left.”

Chuck Collins, director of the Program on Inequality and the Common Good at the Institute for Policy Studies, says the tax implications of the current policy go beyond the deductions donors receive for contributing to a DAF.

“The wealthier the donor, the more tax benefits there are in charitable giving,” he said. “We don’t think about the capital gains and estate tax and gift tax deductions because it’s only a very small group of people who actually benefit from that. I don’t think people understand that the overwhelming subsidy for charitable giving goes to the wealthiest people in the society.”

In “ The True Cost of Billionaire Philanthropy,” a recent report he co-authored, Collins found that for billionaires, every dollar that they give could result in a federal tax reduction as high as 74 cents. The report also found that wealthy people give more to intermediaries — DAFs, family foundations, and other grantmakers — than mainstream donors, who generally give directly to a charity.

“The wealthier you are, the more of that money you give is going into intermediaries and the more of that wealth is moving into the shadows in terms of transparency,” he said.

Bipartisan bills in both the U.S. House of Representatives and the U.S. Senate have been proposed to create a deadline for when donations to a DAF would need to be distributed in order to maintain the donor’s tax deduction. Currently, donors receive an immediate tax deduction for contributing to a DAF, but there is no deadline for when the donation must reach a charity.

Silent Donor’s Sanders says his platform addresses many of those concerns, adding that the company offers more people access to the anonymity of a DAF without opening one of their own. Silent Donor also sets a deadline of 30 days to move a donation through its system and into a charity.

Sanders said nonprofits should listen more to donors who seek more privacy for their gifts. He said that recent decline in philanthropic donations may be related to donors not wanting others to know about their financial decisions. “These development professionals should look critically at how they can leverage privacy as a means to truly engage with more donors,” he said. “There’s a growing privacy movement in the United States, and more and more people take measures to protect their privacy, especially as it relates to their online lives. If you can insert a tool that might appeal to more people, you might as well give it a shot.”

Collins, however, offers a caveat.

“I totally understand the American value of secrecy,” he said. “But there is a legitimate public accountability interest here. If individuals are saying, ‘We don’t want to pay taxes, we want to give money over here,’ in exchange for that, we should know something about where the money is going and if it is really upholding the public interest.”

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