DAFs and Foundations Could Be Eating Up Half of U.S. Individual Donations by 2028

As more charitable giving comes from our country’s wealthiest donors, more of that giving is going into charitable intermediaries like private foundations and donor-advised funds. These two giving vehicles work a little bit differently from each other, but they have one key thing in common. Donors can take tax deductions up front when they put money into them, but then the money can sit, building up, for a very long time before making its way out to charities on the ground.  

This matters because of how fast intermediary giving is growing — especially giving to donor-advised funds, or DAFs. DAF assets have grown more than 340 percent over the past ten years. Last year, DAFs were six of the ten largest-grossing charities in the U.S.

And intermediaries aren’t just taking in more charitable revenue — they’re taking in a higher proportion of that revenue. In 2023, DAFs and foundations together took in 35 percent of all individual giving in the United States, almost double what they took in ten years earlier. 

In fact, if giving to these two charitable intermediaries continues to grow the way it has over the past five years, they’ll be taking in half of all individual giving by 2028.

With each passing year, an additional 2 cents of each dollar donated by individuals is funneled into intermediaries, and away from working charities.

All of this rapid growth means that the assets held in DAFs and foundations will soon eclipse $2 trillion. They’ll reach this milestone in just two years, by 2026, assuming that their assets will grow at the same rate they have over the past five years.

Through the charitable deduction, we taxpayers are subsidizing the money going into foundations and DAFs. But our subsidies aren’t resulting in more money flowing to the working charities our society relies on.

Simple changes to outdated laws — specifically, to increase foundation payout requirements and to establish requirements on donor-advised funds — would put charitable giving back on the right track, and would generate billions in additional funding for working charities.