A donor-advised fund can make charitable giving more strategic — but only if your plan turns committed assets into timely grants.
The donor-advised fund has emerged as the new darling of the charitable giving world. Nonprofits are seeing a surge in DAF gifts and are even organizing, Giving Tuesday-style, to promote more DAF grant recommendations. DAFs have become mainstream, growing 30% year over year in the past decade, according to the National Philanthropic Trust DAF Report. Sponsoring organizations held more than $326 billion in DAF assets as of 2025, and the number of new DAF accounts and amount of DAF assets both continue to rise.
All of this sounds great — and for the sponsoring organizations that manage and administer donor-advised funds, that’s the point, says Laura Kind McKenna, former volunteer managing trustee of the Patricia Kind Family Foundation and Faith and Money Network member.
DAFs have the financial equivalent of a “health halo” around them. They sound benevolent, and their structure is meant to help donors make contributions to charitable organizations more easily and more often. But DAF funds can’t make a difference until they leave the account in the form of a donation to a charity, also known in DAF parlance as a grant recommendation. The onus is on the DAF account holder to move money out of the DAF to where the donor determines it’s most needed. And until then, that money is generating more wealth for the wealthy — those working for the sponsoring organizations that are often a nonprofit arm of a financial service, like Schwab, Fidelity or Vanguard.
What’s more, the upfront benefit in opening a DAF is for the donor, not the eventual grant recipient. When someone opens a donor-advised fund, they receive an immediate tax deduction on those funds, but face no deadline to distribute funds, which can grow indefinitely.
As Kathleen Paylor, vice president of impact investing and philanthropy for Regenerative Social Finance told the Wall Street Journal, “Sometimes it starts with a tax deduction. Sometimes it ends there, and that’s the problem.”
“If I open a DAF, I don’t ever have to give away a penny, and I can even give the future control of it to my children,” says McKenna. “It can grow, as the combined total of these funds has, to billions of dollars that are just sitting in the banks and financial institutions that continue to benefit at the expense of the average person.”
The solution, McKenna suggests, is to use your DAF as a pipeline for donations, not a parking lot for your money.
“My husband and I have a donor-advised fund,” says McKenna. “But, our belief is that this is an administrative tool only. We put money in it at the end of the year and we give it away before the end of the year, no exceptions. DAFs can be a helpful tool. For example, if we have stock that we want to donate, a small nonprofit may not be set up to accept a stock donation. But I can give that nonprofit a donation through my donor-advised fund, which can take shares of my stock at its full worth, and pass that on as a donation by writing a check to the nonprofit I designate to receive the funds.”
Because donor-advised funds are a financial tool, they have been politicized, which could be a precedent for further discrimination against the very kinds of organizations that DAFs were created to support. In April 2026, two of the largest U.S. sponsors of donor-advised funds blocked distributions to the Southern Poverty Law Center, citing the Department of Justice’s investigation into the civil rights nonprofit.
They are not perfect, but donor-advised funds can provide a path forward for giving away money in the short term as well as long-term estate planning. Steps to consider when setting up an estate plan to maximize charitable giving can include:
- Setting up a share specifically to be sent to your donor-advised fund upon your death
- Specifying that the funds in the DAF are distributed by the executor of your will on a timeline (ex: within 1-2 years)
- Naming your DAF as an IRA/401(k) beneficiary
McKenna suggests speaking to a socially responsible financial advisor for more information. Other resources that McKenna appreciates when it comes to understanding the philanthropy industrial complex include Control: Why Big Giving Falls Short by Glen Galaich and the Stupski Foundation’s article about their plan to spend down their assets and close the fund by 2029.
If she had to advise a friend on giving, McKenna says she’d encourage generosity. “Don’t forget that financial advisors are often focused on preserving wealth. If you’ve been successful and you’ve been able to help provide for your children, is there a need for you to hold onto all that privilege? Give from the heart, give without strings attached. Don’t worry so much about doing the right thing as letting go. If you use a donor-advised fund, don’t leave the money in!”
By Brittany Wilmes | August 14, 2026
Brittany Wilmes is a writer, project manager and strategic consultant based in Kansas City, Missouri.