Donor-advised funds (DAFs)—individual tax-advantaged accounts through which individuals set aside funds for current and future charitable use—have become the fastest-growing vehicle for charitable giving in recent years. The number of these individual charitable accounts has mushroomed from 241,507 in 2014 to 728,563 in 2018.1 

The charitable analogue to individual retirement accounts or health savings accounts, DAFs allow individuals to realize a tax deduction for contributions, including appreciated stock, and then disburse the moneys over time to nonprofit charitable organizations of their choice. In contrast to other individual, tax-advantaged accounts—such as 401(k)s—that require minimum distributions, DAFs provide no benefit to a donor once a contribution has been made. The funds can be used for only charitable purposes.

This report uses IRS data from the four largest organizations managing DAFs (Fidelity Charitable, Vanguard Charitable, Schwab Charitable, and the National Philanthropic Trust) to get a sense of the magnitude of their asset appreciation, controlling for new contributions made to the accounts and grants recommended by donor advisers (the individuals who open the account) to on-the-ground charitable organizations. It finds that account appreciation alone—controlling for new contributions and grants—has made available an additional $2.66 billion reserved for future charitable use from 2015 to 2019. Because these four DAF-sponsoring organizations account for less than half such overall accounts, an additional $2.66 billion in DAF asset appreciation may have taken place. The finding is especially important in states where DAFs are concentrated—including California, Illinois, Massachusetts, New Jersey, New York, and Texas. What’s more, national charitable-giving data do not indicate that DAF appreciation has come at the expense of direct charitable giving, which has, similarly, increased year-over-year.