A donor-advised fund is a charitable account. You put money in, take the tax deduction that year, and recommend grants to charities whenever you like. Fidelity, Schwab and Vanguard run the biggest ones; community foundations and National Philanthropic Trust run many more.
The 2025 annual DAF report, now produced by the DAF Research Collaborative after 19 years under National Philanthropic Trust, gives the 2024 numbers:
There are about 3.56 million DAF accounts. Grants from DAFs are now roughly a tenth of all US charitable giving.
What DAFs do well
- Separate the tax decision from the giving decision. Sell appreciated stock into a DAF and you avoid capital gains tax and deduct the full value, then take a year to decide where it goes.
- Bunching. Contribute several years’ worth of giving in one high-income year to clear the standard deduction, then grant it out over time.
- Simplify records. One receipt, many grants.
None of that is trivial. Used well, a DAF lets you give more to charity for the same after-tax cost.
What DAFs do badly
They make it easy to feel finished. The deduction arrives when money goes in. The good arrives when it goes out. Between the two, $326 billion sits in investment accounts, and the payout rate, while far above the 5% private foundations must meet, means the average dollar waits about four years.
There is no legal requirement that a DAF ever pay out. Critics have pushed for one; sponsors have resisted. A 2025 independent report from the Institute for Policy Studies argued that DAF growth is increasingly driven by money that would otherwise have gone straight to charities, not new giving.
The impact-per-dollar view
A dollar in a DAF earning a market return does grow. But the programs with the best evidence, child health in low-income countries, have funding gaps now, and the 2025 aid cuts widened them. A dollar granted this year to a program at $4,000 per life saved does something a dollar granted in four years cannot do for the child who did not make it to 2029. Investment returns of a few percent do not close that gap.
There is one legitimate reason to hold: you have not yet decided where the money does the most good, and you are actively working it out. That is a months-long question, not a years-long one.
A rule of thumb
If you use a DAF:
- Contribute for tax reasons. Appreciated assets, bunching, a windfall year.
- Grant on a schedule you set in advance. Quarterly or annually, a fixed percentage or the full balance. Do not let the default be “later.”
- Send the impact share to programs with a measured cost per outcome. The DAF’s convenience is worth nothing if it delays a grant that had a date on it.
Method notes
DAF figures are from the 2025 Annual DAF Report covering 2024. “Roughly a tenth of US giving” compares $64.9 billion in DAF grants with total giving in the $590 to $600 billion range reported by Giving USA for the same year. The four-year estimate is the inverse of the 25.3% payout rate, a simplification.
Sources
Figures come from the cited sources as of the dates shown. Cost-effectiveness estimates change as programs and evidence change; check the source before giving. We are not financial advisers and receive nothing from any charity named here.