DAFs provide tax benefits and a bigger pool of money to donate
Critics say these funds can create “warehouses of wealth”
It’s all the rage in charitable giving — and it’s actually got some charities worried.
Donor-advised funds — money that grows tax-free in individual accounts — are reshaping the landscape of U.S. philanthropy. After creating their account, donors choose how it’s invested, and the money compounds until they decide where to dole it out. DAF assets mushroomed to more than $85 billion at the end of 2016 from $30 billion in 2010.
Not everyone thinks that’s good news. Critics say the approach may slow the flow of money directly into nonprofits that serve the needy on a daily basis. Moreover, it injects charitable affiliates created by for-profit financial players such as Fidelity Investments and Charles Schwab deep into the big business of philanthropy — a boon for them and their clients, but, some worry, not so clear a win for the causes.