At a time of staggering inequality and a fraying social safety net, charity can play a hugely important role in addressing urgent social needs.
Instead, however, a growing number of extremely rich people are using charity mechanisms called donor-advised funds, or DAFs, to claim substantial tax benefits — often without actually supporting the charities addressing those needs.
In “Warehousing Wealth,” a new report we’ve co-authored for the Institute for Policy Studies, we track the explosive growth of these accounts and their perils, and recommend some reforms.
DAFs are holding accounts for high-dollar donors designated specifically for charitable giving. Originally a creation of community foundations, they’ve been adopted and aggressively marketed by a number of for-profit Wall Street firms: Fidelity Investments, Charles Schwab and Vanguard all now offer them.