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Geographic Impact

The availability of these assets for charitable purposes may have varying effects in different states. Donor advisers are free to direct their grants to any organization, not necessarily those in their geographic area. However, a significant portion of their grants will likely be made locally. A 2016 Manhattan Institute report found donors using national DAF organizations and those using community foundations in Chicago, Dallas, and Denver support many of the same local organizations.13 Thus, the availability of DAF appreciated assets can increase charitable giving in areas where they are concentrated.

The same four organizations—Fidelity, Vanguard, Schwab, and the National Philanthropic Trust—that provided asset appreciation data have also provided data on their donor advisers’ geographic location. Therefore, in addition to estimating the extent of appreciated DAF assets—reserved, by definition, for future charitable use—it is possible to estimate the percentage of all DAFs found in each state and the number of DAF accounts held in each state.

DAFs are concentrated in states where households are more likely to be relatively affluent and itemize their tax returns—a function of both relative income and the degree of state and local taxation. DAFs are common, in other words, in many high-tax blue states. DAF asset appreciation can be of particular importance to charitable organizations in California, Florida, Illinois, Massachusetts, New York, and Texas, among other states.14

The data in Table 2, it should be emphasized, represent only the percentage of DAFs held by the four reporting organizations, not DAFs managed, for instance, by local community foundations. (These likely have smaller individual balances, as the average of all DAF accounts—$166,000—is lower than the average of the top four organizations, $256,000.) Thus, DAF asset appreciation may well affect other states. Still, the assets and account holder figures in Table 2 should be roughly doubled to gain a full picture of DAF assets and accounts.AEI_paper_Table2Artboard 1 copy@3x-8

The small number of DAFs managed by major financial firms in some states does not necessarily mean that such accounts are absent in those states. There are more than 800 community foundations dispersed across the US that may also manage DAFs and that may thereby realize asset appreciation. (See Table 3.)

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