Giving Compass' Take:
- Chuck Collins and Helen Flannery explain why it is difficult to build a comprehensive picture of where DAF funds are going -- or sitting.
- What role can you play in supporting donor-advised fund transparency and responsibility?
- Read about policy recommendations to improve donor-advised funds.
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In 2020 (the most recent year for which data is available), grants made from DAFs to operating nonprofits were more than double what they were just four years earlier. But contributions to DAFs regularly exceed payouts. According to the National Philanthropic Trust, even as donations from DAFs in 2020 hit a record $34.67 billion, contributions to DAFs were an even higher $47.85 billion. Consequently, and buttressed by a rising stock market, the amount of money sitting in DAF accounts that has not yet made it into the bank accounts of operating nonprofits continues to rise.
We have surprisingly little information about where DAF money goes. For sure, annual reports from industry groups offer aggregate giving numbers and even data on broad giving categories (such as “public benefit” nonprofits). Yet, other than outside voices like our own or that of Ray Madoff of Boston College, there are strikingly few independent data sources.
But that is changing. The DAF Research Collaborative (DAFRC), organized by Dr. H. Daniel Heist of Brigham Young University and Dr. Danielle Vance-McMullen of De Paul University, is rapidly increasing knowledge of the DAF field. As the collaborative details on its website:
Donor-advised funds play an important role in the modern philanthropic landscape. As such, philanthropic leaders and policymakers are highly motivated to enact policies that maximize the public benefit of these funds. However, leaders and policymakers do not currently have access to a robust evidence base to inform these policies. In addition, little is known about how DAFs affect and reflect giving by high-net-worth individuals more broadly. A more robust evidence base regarding DAFs is especially important in the current era of evidence-based policymaking.
Indeed. And not a moment too soon. To date, research on DAFs has largely been shaped by sponsors who have a vested interest in defending the $160 billion now stored in DAF accounts. They find ways of presenting cherry-picked data to support the status quo and to attack more accurate findings that do not.
Read the full article about donor-advised funds by Chuck Collins and Helen Flannery at Nonprofit Quarterly.