DAFs as a Tool for Activism

In just a few days, Donald Trump will return to the White House, and the political activist class is already in full gear, showing the potential of DAFs as a tool for activism. Behind both sides of the political aisle are well-resourced supporters who can fund movements and influence agendas. Beyond outright political donations to candidates and political action committees is a vast array of philanthropies that, while not permitted to get directly involved in politics, can shape ideologies and mobilize support via think tanks, awareness campaigns, protest movements, and legal aid in judicial test cases.

Shortly before the election, the Wall Street Journal probed one example of this growing trend in a lengthy piece that outlined a world of donors and philanthropic organizations supporting conservative causes and showing the potential of DAFs as a tool for activism. They include “election integrity” campaigns, which critics see as shorthand for election denialism. Fast Company contacted seven organizations mentioned in the article. One of them, DonorsTrust, responded.

“DonorsTrust was specifically created 25 years ago to work with self-identified conservative [donors],” says the nonprofit charitable organization’s president and CEO Lawson Bader. He then amends that a tad, calling the donors “conservatarian” to include libertarian-minded givers.

A Booming Charity Tool and a Tool for Activism

DonorsTrust specializes in a type of philanthropy called a donor-advised fund (DAF). DAFs are taking off due to their low overhead costs, generous tax deductions for donors, lenient regulation, and ability to give anonymously. For the uninitiated, DAFs can take a moment to wrap one’s head around. Patrons deposit money in funds, which are administered by a nonprofit sponsor organization. This is a lot cheaper than setting up a full-fledged foundation, but there’s a trade-off. Donors can “advise” a sponsor like DonorsTrust on where they would like the money to go, and the sponsor usually goes along, but donors do not have final say.

DAFs are the fastest-growing charitable vehicle in the U.S. About four-fifths were opened after 2010, with about a quarter starting up since 2020, according to the Dorothy A. Johnson Center for Philanthropy. Their donations have nearly doubled from 2019, hitting about $55 billion in 2023, per the National Philanthropic Trust. Fidelity Charitable, National Philanthropic Trust, and DAFgiving360 (formerly Schwab Charitable) are by far the biggest sponsors, according to research by the progressive Institute for Policy Studies (IPS), with their donors supporting a vast range of charities.