On October 8, thousands of donors will take part in DAF Day, organized around a simple idea: Move Billions, Faster. This year, Ktisis has two asks. Move: get your DAF out of Fidelity Charitable, Vanguard Charitable, or Schwab’s DAFgiving360, or any other institution that’s not aligned with your values. Free: wherever your money lives, commit to paying it out faster than you have been.
A strange thing about donor-advised funds is that people talk about the money in them as though it still belongs to them: my DAF, my DAF balance, my money. But the money doesn’t belong to you anymore. When you contributed those assets to a DAF, you made an irrevocable charitable contribution and took the tax benefit that came with it. The sponsoring organization now legally owns the assets, and they can only move out to charitable purposes — what you kept was the ability to recommend, not declare, where they go. That distinction matters, as recent events have demonstrated.
More than $327 billion now sit in DAFs. Meanwhile, climate disasters are killing and displacing millions; democratic institutions are under strain; AI is reshaping jobs and information faster than the sector can respond; poverty is rising in communities that were already operating on thin margins. And the balance keeps growing. A new report by the Institute for Policy Studies revealed that assets at the four largest DAF sponsors (Fidelity, Vanguard Charitable, DAFgiving360, and National Philanthropic Trust) have grown about 64% faster than their grants since 2017. Money is moving out, but the pile waiting to move is growing even faster.
Two questions deserve more attention than they get: how much control does a donor actually have over where the money goes, and why is so much money still sitting there?
DAFs are useful: they simplify complex-asset giving, let families organize giving together, and let donors move fast when it matters. But a tool is only useful when it’s used, and used well: held by a sponsor whose standards align with your values, and paid out at a pace that meets the needs of the field.
Move: Three sponsors reminded us who’s in charge
Donors have historically picked a DAF sponsor the way they’d pick a bank: fees, investments, options, convenience. But a DAF sponsor isn’t a bank. It owns the charitable assets, and it ultimately decides which grant recommendations it will honor. Values should be part of the calculation for a donor as they make the decision as well.
After Southern Poverty Law Center was federally indicted this spring, Fidelity Charitable froze grants to the organization, and Vanguard Charitable and Schwab’s DAFgiving360 followed. All three have guidelines governing when grants may be halted, including circumstances involving formal charges or government investigations. But ProPublica found that Fidelity and DAFgiving360 continued allowing grants to other organizations facing similar circumstances, including hospitals, universities, charter schools, and a white nationalist organization, so the rules are applied inconsistently at best.
That’s why Ktisis co-founded the Free Your DAF campaign, and why this DAF Day we’re asking you to move your DAF out of Fidelity, Vanguard, or Schwab as long as they continue to prohibit funding to SPLC and maintain their inconsistent practices and into a sponsor whose grantmaking standards you can trust to be fair. The coalition’s donor toolkit covers both ends of that: how to inform your DAF sponsor that you’re moving your money, and how to evaluate where it goes next. So far hundreds of donors have participated in the campaign, representing over a half billion dollars in DAF assets.
And don’t stop at grantmaking policies when you choose a sponsor — ask how your money will be invested while it’s there. If the investments conflict with the values driving your philanthropy, your money may be working against your stated grantmaking goals. Look for a sponsor that gives you investment options that align with your values.
Free: Pay it out faster
Move is about who else has power over your charitable dollars. Free is about what you do with the power only you have: determining your payout. A bigger DAF balance isn’t evidence of successful philanthropy. It’s just philanthropy delayed.
Remember that your checking account balance is money available for your own needs, security, and future; your DAF balance is money you’ve already committed to the needs, security, and future of everyone else. The DAF industry can often make both numbers feel the same, calling to mind investment performance, balance growth, and the satisfaction you’d get from a retirement account doing well.
That framing isn’t neutral. Most sponsors charge an annual administrative fee as a percentage of your balance, and the funds your DAF is invested in charge their own fees on top of that. When that money is invested in the parent company’s own funds, as much of it is, those fees go to the parent company. If a financial adviser manages your DAF, they are likely paid a percentage of the balance too. Every one of those fees grows when your balance grows and shrinks when you grant money out. No one in that chain gets paid more when you give faster.
That’s our other ask this DAF Day: wherever you have your DAF, scale and speed up your giving. And if figuring out how to do that well feels harder than deciding to do it, that’s exactly the kind of work we do at Ktisis.
There is no such thing as a perfect spend-down strategy, so don’t let the search for one become the reason you wait. A few ways to move more now:
- Set a timeline. Decide what the money is for and when you want it deployed. That might mean spending down the entire account within five or 10 years, or setting another date that reflects what you’re trying to accomplish.
- Set an annual floor. Decide the minimum percentage you’ll grant each year, and treat it as a floor. Industry payout rates can provide context, but use this as an opportunity to be ambitious and challenge yourself.
- Be willing to let the balance go down. It can feel counterintuitive to watch your DAF balance shrink. But unlike a retirement account, preserving the balance isn’t necessarily the goal. The money has already been committed to charity. If you’re consistently granting less than the account earns, your DAF may keep growing year after year. Don’t be afraid to grant enough to draw down the balance — and recognize that a shrinking DAF can be a sign that it’s doing exactly what you created it to do.
- If your DAF is meant to outlive you, give the next generation more than a balance. A multigenerational DAF is a choice worth interrogating, but if passing the DAF to your children or grandchildren is the right choice for your family, put structures around that choice. Set a minimum annual payout, establish a spend-down timeline, or create other expectations that require the money to keep moving. Don’t just pass down the assets and the ability to decide someday what to do with them. Pass down the obligation to give.
This October
DAFs are useful: they simplify complex-asset giving, let families organize giving together, and let donors move fast when it matters. But a tool is only useful when it’s used, and used well: held by a sponsor whose standards align with your values, and paid out at a pace that meets the needs of the field.
If your DAF is with Fidelity, Vanguard, or Schwab’s DAFGiving360, move it — the Free Your DAF toolkit walks through how to pick a sponsor whose standards you trust. And wherever your DAF lives, free more of the money in it.
If you’re ready to build a plan for either, talk to us.
