Washington, D.C. — A new report from the Institute for Policy Studies by Helen Flannery and Chuck Collins found that in 2019 alone, at least one billion dollars in commercial donor-advised fund (DAF) grants went to other commercial DAFs.

“This is the tip of the iceberg in DAF to DAF giving. We are seeing a growing amount of charitable dollars warehoused in intermediaries such as private foundations and DAFs,” said Helen Flannery, director of research at the Charity Reform Initiative. “DAF sponsors will argue that we should leave them alone, and that they are already giving plenty to charity. But our findings put this lie to this claim. We have to have payout requirements for DAFs, and we have to have greater transparency into their giving so we can find out what their impact really is.”

As IPS has shown in other research, this warehousing of charitable donations has grown significantly over the last decade.

“Donor advised funds have a fundamental design flaw,” said Chuck Collins, director of the Charity Reform Initiative at the Institute for Policy Studies. “Donors get a substantial tax break when they place funds in an account, but there is no requirement or incentive to then move funds to working charities.”

“Wealthy donors need to get off their assets,” Collins continued. “We need to modernize the rules governing DAFs to ensure that funds flow to active charities in a timely manner. Donors should get tax breaks when they give up ‘dominion and control’ over funds, which was the intent of the 1969 tax law governing charitable giving.”

The full report can be found here.

A summary of the key findings can be found here.

Key Findings

  • More than $1 billion was granted from commercial DAF sponsors to other DAF sponsors in 2019. Over the five years IPS analyzed from 2015 to 2019, the 39 electronically-filing commercial DAFs granted a total of $2 billion to other commercial DAFs.
  • Commercial DAF-to-DAF giving is growing astronomically. Just $209 million was transferred between commercial DAFs in 2015. This means that the one billion dollars transferred between commercial DAFs in 2019 represents growth of 409% over the five years from 2015 to 2019, for an average effective growth rate of 50% per year. And this type of commercial DAF-to-DAF giving grew at more than three times that rate, 166%, in just the past single year from 2018 to 2019.
  • 31 of the commercial DAF sponsors in our analysis gave to another commercial DAF in at least one of the five years from 2015 to 2019. On average, 22 commercial DAFs gave to at least one other commercial DAF in any given year. Most DAFs gave to just three or four different commercial DAFs each year. But the largest–including Fidelity Charitable, Schwab Charitable, the National Philanthropic Trust, the American Endowment Foundation, and Morgan Stanley Global Impact Funding Trust — distributed grants to 16 or more other commercial DAFs each year.
  • 44 of the top commercial DAFs received at least one grant from another commercial DAF from 2015 to 2019. On average, 33 commercial DAFs received grants from other commercial DAFs in any given year.
  • In 2019, the Fidelity Charitable Gift Fund was the largest grantor to other commercial DAFs, and was the largest recipient of commercial DAF grants as well. Fidelity gave $448 million to a total of 29 other commercial DAF sponsors that year, while at the same time receiving $231 million in grants from 14 other commercial DAF sponsors.

Of the 52 top commercial donor-advised fund sponsors in the United States, 39 filed their tax returns electronically in at least one year from 2017 to 2019. Unless otherwise specified, the findings in the report are based on these 39 electronically-filing DAF sponsors. They do not include any DAF granting done by DAF sponsors that filed on paper.

The full report can be found here. 

About the Charity Reform Initiative

The Charity Reform Initiative of the Institute for Policy Studies aims to modernize the rules governing philanthropy to increase the flow of resources to the nonprofit independent sector and protect the integrity of the tax system.


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