New Recommended Resource:
Independent DAF Report Pulls Curtain Back
The Independent Report on DAFs(28 pages, Charity Reform Initiative, Institute for Policy Studies, 2025)By Chuck Collins, Bella DeVaan, Helen Flannery, Dan Petegorsky
Go directly to report →
The remarkable growth in charitable funds going to (and through) donor advised funds (DAFs) triggers high hopes and deep curiosity across the nonprofit sector, especially among fundraisers. Where do these monies come from? Where are they going? How are they being used? Who is deciding, and who benefits? How can they be contacted?
As the $250 billion DAF sponsor industry has grown to represent 10 of the largest 20 charities in the US, and receives, one out of five charitable tax deduction dollars, so a growing literature is needed to explain this world.
For 18 years the go-to general source for DAF data has been The National Philanthropic Trust, a Pennsylvania-based public charity that each year issues an annual publication, most recently called the 2024 DAF Report. The NPT report provides baseline numbers and trends about the DAF sponsor industry, but it’s reporting only goes so far, as NPT is itself a major DAF sponsor ($30 billion assets) and an industry advocate.
The Independent Report on DAFs is a welcome and original contribution to help educate the public and charitable fundraisers about the role and mysteries of DAFs in the charitable landscape. Going beyond the well-documented growth of funds going to and from DAFs, the Independent Report’s best contributions are its willingness to share source names by reporting which DAF sponsors are included, and in what category, in its data. This is one of the biggest gaps in the NPT reports, not knowing which sponsors are compared or conflated, blurring the lines and blurring the results on issues such as payout rates. We are especially impressed with the transparency and open-source aspect: all of the Independent Report’s sponsor data is available for public download.
Traditionally reporting on DAF sponsors has categorized three types:
- National (or commercial) such as Fidelity, Vanguard, NPT and Charles Schwab
- Single issue sponsors (such as the Nature Conservancy or Ohio State University
- Community foundations
The Independent DAF report adds a valuable new fourth category of donation processors, entities formed to process thousands of small dollar donations, often crowd-sourced or through a payroll or workplace plan. The report concludes that combining payment processors with national sponsors can “understate national sponsor DAF account sizes by as much as 80 percent.” By separating these donation processors’ ability to deliver quick pass-through in contrast to national sponsors, a better picture is developed for payout rates for various DAF sponsors. Since payout is a principal point of contention for DAF’s, which currently have no minimum payout rate unlike private foundations, this has been contested ground over whether Congress should require some floor for getting DAF funds into active public benefit.
The report authors give detailed treatment to the various ways DAF payout is calculated by industry groups and by the IRS, and the issue of continued accumulation of DAF assets, especially by the commercial sponsors.
Also noted:
- DAF-to-DAF grants accounted for an estimated $4.4 billion in 2023, which affords no further tax or public benefit advantage, and has no clear rationale.
- Private foundations transferred at least an estimated $3.2 billion in grants to national donor advised fund sponsors in 2022, evading their 5% payout requirement and disclosure rules for private foundations.
- Community foundations appear to be at a disadvantage in comparison to national DAF sponsors, seeing a 9% decrease in contributions and smallest growth of assets, while at the same time actively increasing their grants by 56%.
Kudos to IPS for establishing a new go-to resource on donor-advised funds, one that is independently funded (not by a DAF sponsor), and providing its analysis for everyone to see, scrutinize, and …
