The Benefits and Costs of Donor Advised Funds
Donor Advised Funds (DAFs) are now a major source of charitable donations in the US, responsible for 1 in 10 dollars donated to charity in 2015. In 2016, Fidelity Charitable, whose only mission is to provide DAFS, became the largest charity in the US. Paradoxically, most people have never heard of DAFs or Fidelity Charitable. This leads us to ask, who uses DAFs and why, what is the impact of government tax policy toward DAFs, and could the extra fiscal cost of subsidizing DAFs be balanced out by an extra public gain of new charity resulting from tax policy toward DAFs?
The author wishes to thank the National Science Foundation, grants SES-1427355 and SES-1658952, for financial support, and Alex Kellogg for his valuable assistance. I am also grateful for helpful comments by Jane Gravelle, Gerald Auten, Thomas Barthold, Robert Moffitt, and James Poterba. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.