(Illustration by iStock/Atlas Studio)
Billions in donor-advised funds (DAFs) sit like honey crystallizing in forgotten jars—sweet but inert—while urgent social needs multiply beyond the glass. According to a recent report from the Donor Advised Fund Research Collaborative, DAF assets in the United States reached $326 billion in 2024, up more than 27 percent in a single year. The pile grows faster than the giving. Most of these billions are not on their way to anywhere.
A donor-advised fund works like a charitable holding account. A donor contributes cash or assets, takes the full tax deduction in that moment, and then recommends grants for nonprofits on whatever timeline they choose. The accounts are housed by sponsors, think community foundations or the charitable arms of financial firms like Schwab and Fidelity. The deduction is immediate, but the giving is optional and sometimes never occurs. That gap is the problem.
I have spent 20 years assembling capital for the populations and problems the market won’t reach on its own, from a $2.1 billion urban infill program in São Paulo to refugee entrepreneurs and a women’s loan fund built across CDFIs, commercial banks, and community foundations. The capital is rarely unwilling. It just needs a catalyst, someone to move first, de-risk the thing, and prove it works. That is exactly what idle DAF dollars could be, and exactly what they are not when they sit still.
In an average year, more than a third of DAF accounts make no grants at all, according to the 2024 National Study on Donor Advised Funds. The imbalance sharpened in 2024 rather than evening out: Contributions to DAFs increased 37 percent or nearly $90 billion over 2023, but only about a quarter of total assets reached working charities. The donors filling these accounts are disproportionately high-income households, the same households that capture the largest tax benefit the moment they contribute. As federal spending contracts, more of the nation’s charitable safety net leans on those dollars, and more of those dollars are sitting still. Philanthropy faces its moment of truth. Will we deploy these resources effectively, or watch them calcify?
My solution is radically simple: Establish a national ranking of DAF sponsors based on a single metric—the percentage of total assets deployed annually. Every sponsor with assets over $500 million would self-report one calculation: dollars deployed to charitable causes divided by total assets under management. No complex impact measurements, no elaborate theories of change—just one number that cuts to the heart of philanthropy’s purpose.
A Simple Metric
The disclosure would do the one thing the current system never forces: make stillness visible. Right now, a sponsor that deploys 4 percent of its assets and one that deploys 40 percent look identical from the outside. Both advertise their charitable mission. Both collect their fees. The difference, the only one that matters to the nonprofits waiting on the other end, is invisible to donors choosing where to park their giving. A published ranking could end that. It converts deployment from a private virtue into a public scoreboard, and scoreboards change behavior precisely because they are monitored.
This pressure works through the donor, not around them. A donor choosing between two sponsors can now see which one moves money and which one hoards it, and no reputation-conscious sponsor wants to sit at the bottom of a list every prospective client, journalist, and board member can read. That flips the incentive. Today a DAF sponsor profits by growing assets under management, because management fees scale with the pile, so the rational move is to gather and hold.
This ranking rewards the opposite. It pays to deploy, which means it pays to go find the deployment worth bragging about. The best sponsors stop being passive custodians and start scouring the landscape for the deals that change things: the early housing model, the unproven intervention, the breakthrough no one else will fund yet. None of this requires a new law or mandated minimum payout. It requires only that the number exist, in public, where it cannot be ignored.
Moving Resources
Critics will argue this oversimplifies the nuanced work of philanthropy. They’re right, but that’s the point. A single ratio cannot capture a theory of change or weigh the patience some causes genuinely require. But it answers the one question every other metric lets sponsors avoid: whether resources are actually moving to meet society’s needs.
The resistance to ranking DAFs is rarely about nuance. It stems from a culture of deference to engaged donors and a quiet fear of losing business. That fear points exactly the wrong way because intervention is already underway. In November 2023, the US Treasury and the IRS proposed the first regulations on DAFs in nearly two decades, the opening move under a 2006 law that had sat unimplemented ever since. The proposed rules are largely definitional. They define what a DAF is and which distributions are taxable. What they pointedly leave untouched is the question that matters most: How fast the money must move. But the direction is set. Regulators have shown they will act, and the deployment question is the obvious next frontier. The only choice left for the industry is whether it shapes that standard or waits to have one imposed.
Bringing Light to DAFs
Here’s the opportunity: A single metric ranking system that brings sunlight to the DAF industry. The concept is up for grabs, free for any organization with the courage to implement it. Will a community foundation step up? A national research organization? A consortium of progressive DAF sponsors? The idea belongs to whoever seizes it first.
This pressure to deploy isn’t just about moving money—it’s about catalyzing the kind of innovative, high-risk investments that philanthropy was built for. Philanthropy’s real advantage isn’t scale; governments and markets dwarf it. It’s the tolerance for risk and failure. It can fund the unproven idea, the early idea, the bet no agency could defend on a ballot, and no seed investor could defend to her partners. That’s precisely the capacity that goes dormant when funding sits idle in donor-advised funds. Imagine DAF sponsors competing to fund pilot universal basic income programs that governments can scale or backing breakthrough clean energy technologies too early-stage for federal grants. Picture them seeding community-based mental health interventions that could reshape public health policy or testing new models of affordable housing that state agencies can adopt. This is what philanthropy should be doing—taking the smart risks that government can’t, proving what works, and creating templates for public policy. Not sitting on billions while waiting for regulation to force our hand.
One number. Published annually. No excuses. The time for action is now, before these resources become bones in an ancient riverbed—a monument to what could have been, while the world moves on without us.
Read more stories by Robert Foster.