Last year, we looked at the amount of money granted from one national donor-advised fund to another. This year, we have expanded our analysis to look at the money being granted between all donor-advised funds. We found more than $16.8 billion in grants between donor-advised funds over the four years from 2020 to 2023, and $4.4 billion in grants in 2023 alone.
Why should we care about DAF-to-DAF grants?
Donor-advised funds, or DAFs, are financial accounts managed by charities. When a charity manages a DAF, it is called a DAF sponsor. Donors can put money into DAFs, and take a tax deduction immediately, because they’re technically giving to a charity (the sponsor). But the sponsor then gives the donors broad advisory privileges to recommend grants from the DAF — and the sponsor nearly always gives the grants to the recipients and on the timeline the donors want.
DAFs have been the fastest-growing segment of the charitable sector for more than a decade. Their assets have grown by more than 340 percent over the last ten years from 2013 to 2023; they now take in 16 percent of all U.S. individual giving; and they now make up six of the top 10 charities in the U.S.
DAFs can be great for their donors. They provide significant charitable tax deductions, including for complex assets like stock and real estate, while at the same time giving donors a huge amount of control over when and where the grants go out.
Unfortunately, though, because DAFs have no payout requirement, the money in these funds often fails to move quickly enough to working charities directly addressing urgent needs in a timely way. And because they allow their donors to be completely anonymous — even to the IRS and the organizations receiving their grants — there is no way for the public to make sure the money is moving.
To make matters worse, a few years ago we discovered that significant amounts of money were being transferred from some donor-advised funds to others, and that these transfers all counted as charitable grants. Over the intervening few years, this amount has grown many-fold.
The numbers
In our previous analyses of this phenomenon, we examined transfers from one national donor-advised fund sponsor to another. National sponsors are those that have no specific geographic focus (like community foundations do) or mission focus (like operating charities do), and, at the time, it was the only set of sponsors we were able to examine with rigor. These national-to-national transfers accounted for a huge amount of money — reaching into the billions — but left out any DAF-to-DAF transfers between other types of sponsors.
This year, however, we are able to report on DAF-to-DAF transfers for all sponsor types. To emulate a similar analysis by Giving USA, the charitable sector’s gold standard report on giving trends, we looked at grants from either national sponsors or other sponsors for which DAF grants made up 80 percent or more of their total grants, to other sponsors of the same two types.
What we found was that DAF sponsors gave more than $16.8 billion to other DAF sponsors over the four years from 2020 to 2023, and $4.4 billion in 2023 alone.
This DAF-to-DAF granting isn’t always necessarily going from one DAF account to another; for example, a DAF grant can go to a non-DAF account at a single-issue charity that also happens to be a DAF sponsor. Unfortunately, because we don’t have DAF grant information at this level of detail, we have no way of separating those grants out from other DAF giving.
This is one reason why we have restricted grant recipients in this analysis to those where DAF grants make up 80 percent or more of their total grants. And the vast majority — two-thirds — of this revolving grant money is both given and received by national DAF sponsors, where, for the most part, DAFs make up all or nearly all of their assets, revenue, and grants. When we looked only at grants going from national sponsors to other national sponsors, we found more than $10.2 billion going back and forth between national sponsors over the four years from 2020 to 2023, including $2.9 in 2023 alone.
Taking the scenic route to charity
No matter how you slice it, there is a sizable amount of money shuttling between donor-advised fund sponsors each year. Sponsors typically count this money towards their self-reported payout rates, even though it’s not actually getting to charities doing real work on the ground.
DAF-to-DAF granting can happen for several reasons. Donors may switch between commercial DAFs when they change banks, because having their personal portfolio and their DAF held in the same institution makes management easier. They may want to take advantage of better giving advice, lower fees, or higher yields. And donors may switch between commercial DAFs because doing so allows them to drop their name from grants out of the recipient DAF, rendering their gifts completely anonymous.
But this sort of transfer shouldn’t count as charity. Donors get tax deductions for putting money into DAFs so that money can go to real charities. But, instead, it’s cycling between investment portfolios.
For more information, see our previous reporting on this at Inequality.org.
A note on why our numbers differ from those in Giving USA
We have attempted to replicate a DAF-to-DAF grant analysis conducted by Giving USA as closely as possible. However, there are some differences that we are aware of.
Giving USA’s methodology
In their 2023 and 2024 reports, Giving USA examined a sample set of over 300 DAF sponsors for DAF-to-DAF transfers. (This included 315 sponsors in the 2023 report and 309 sponsors in the 2024 report.) They counted grants as DAF-to-DAF transfers when the grants came from either a sponsor in their sample set or an out-of-sample sponsor where 80 percent or more of its grants come from its DAFs, and when the grants also went to either of these same two types of sponsors.
Giving USA reported on DAF-to-DAF transfers for 2019 and 2020 in their 2023 report, and 2022 in their 2024 report, meaning that we unfortunately do not have information about DAF-to-DAF transfers for 2021. (Giving USA reported $1.6 billion and $1.8 billion in DAF-to-DAF transfers in 2019 and 2020, and $5.6 billion in 2022.)
Our methodology
Because we do not have access to the lists of sponsors Giving USA included in their sample set, we have examined grants from an internally maintained list of national DAF sponsors for our base sample of DAFs. For all of these national sponsors, DAF grants make up 80 percent or more of total grants.
In addition, to endeavor to match Giving USA’s methodology as closely as possible, we are also examining grants from any DAF sponsors that are not already in our set of national sponsors and for which DAF grants make up 80 percent or more of total grants.
We consider any transfer to be a DAF-to-DAF grant if it comes from either of these two types of sponsors (either a national sponsor or a non-national sponsor where 80 percent or more of its grants come from its DAFs) and goes to either of these two types of sponsors (again, either a national sponsor or a non-national sponsor where 80 percent or more of its grants come from its DAFs).
Our fiscal year cutoffs may also be different from those used by Giving USA. In our analysis, we assign grants to the calendar year of the organization’s fiscal year end. For example, if a sponsor has a fiscal year ending in June 2023, we assign its grants to the 2023 calendar year. This may not be the case with the Giving USA data, and may explain a large part of the difference between their analysis and ours in the distribution of grants across reporting years.
For more, please see our previous reporting on this subject here.