Not Just a Wealthy Tax-Shelter: Donor-Advised Funds Are Effective Tools for Giving, Study Finds

A recent Donor-Advised Fund Research Collaborative report reveals that 54% of donor-advised funds distribute at least half of their assets to nonprofits within three years. Contrary to criticisms, it shows that half of these funds are modest in size, with assets of $50,000 or less. 

The study, spanning nine years and covering over 600,000 gifts from 57,000 individual accounts, challenges the notion that DAFs predominantly serve the wealthy and hoard tax-advantaged assets. The collaborative, supported by entities like the Bill & Melinda Gates Foundation and the Dorothy A. Johnson Center for Philanthropy, addresses the need for more data on DAFs. 

These charitable accounts, created from tax-deductible contributions, offer simplicity and low costs to donors, with the sponsoring organizations managing administration and record-keeping. Despite a slight dip in total assets in 2022 due to market fluctuations, DAFs remain a significant philanthropic vehicle, with nearly half of all accounts holding less than $50,000. 

For more information see Abby Schultz “Not Just a Wealthy Tax-Shelter: Donor-Advised Funds Are Effective Tools for Giving, Study Finds,” PENTA, February 15, 2024.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.