Donor-Advised Funds Are Growing, But Are They Actually Making Giving Better?

Americans gave a record $592.50 billion to charity in 2024 (Giving USA 2025). That’s the headline. But look closer, and a quieter story is unfolding: giving is drifting away from everyday donors and into the hands of the wealthy and their donor-advised funds. DAF assets hit $327.87 billion in FY2024, up 27.9% from the year before (DAF Research Collaborative). Meanwhile, the share of households that give has collapsed from 65% in 2008 to 49.6% in 2018 (NPTrust). Something’s off. We’re raising more money, but fewer people are part of it. And that’s a problem for the soul of charity.

The Numbers Don’t Lie—But They Distract

Record totals can make us feel good. But they mask a disturbing trend: giving is concentrating at the top. The top 50 donors gave $16.2 billion in 2024, up 32% from 2023 (Giving USA 2025). That’s not just a blip; it’s a shift. When a handful of mega-donors can move the needle more than millions of small givers, our sector’s health is at risk. We’re becoming a system that depends on the whims of a few, not the participation of many.

DAFs: A Tool for the Wealthy, Not the Masses

Donor-advised funds are the poster child for this concentration. They’re not inherently bad—they can encourage thoughtful giving and tax efficiency. But look at who uses them. 42% of giving Millennials used a DAF in the past year, compared to just 13% of Gen X and 10% of Boomers (Financial Planning). That’s a generational divide, but also a wealth divide. DAFs are often funded with large, lump-sum contributions that get tax breaks immediately, while grants can be delayed. The industry’s payout rate rose to 25.2% in FY2024 (DAF Research Collaborative), which is better than the 20% minimum, but still means a quarter of DAF assets are granted out each year—not exactly a flood.

The Hidden Cost: Less Giving, More Hoarding?

Here’s the rub: DAFs might be growing, but they’re not expanding the donor base. They’re just moving money around. The share of households that give has fallen to under half (NPTrust). And while DAF grants hit $64.60 billion in FY2024 (DAF Research Collaborative), that’s still a fraction of the total $592.50 billion given. The real issue isn’t the tool; it’s the mindset. We’ve become obsessed with the mechanics of giving—tax deductions, investment vehicles—instead of the act itself. Charity is defined as the voluntary giving of help to those in need (Charity terminology). When we turn giving into a financial strategy, we lose the empathy that drives it.

The Empathy Factor: Why Small Donors Matter

Research shows empathy is a robust driver of giving (Nature Communications). But empathy is personal. It’s hard to feel empathy for a faceless DAF. When we give directly—whether through a small check, a volunteer shift, or a GivingTuesday campaign—we connect. That connection is what sustains giving over time. GivingTuesday 2024 raised $3.6 billion from 36.1 million participants (GivingTuesday Data Commons). That’s not just money; it’s millions of people choosing to participate. That’s the opposite of DAF concentration.

Counter-Argument: DAFs Are Efficient

Defenders will say DAFs are efficient, flexible, and encourage larger gifts. And they’re partly right. The National Philanthropic Trust made a record $6.61 billion in grants in FY2025, up 20%, with two-thirds unrestricted (National Philanthropic Trust). That’s real impact. But efficiency doesn’t equal equity. When DAFs are used primarily by the affluent (average account size $91,300, per DAF Research Collaborative), we’re building a system that privileges the wealthy. And it’s not like DAFs are replacing other giving; they’re adding to the concentration. The top 50 donors gave 32% more in 2024 (Giving USA 2025). That’s not broad-based generosity.

What We Should Do Instead

We need to rebalance. That means: 1) Encouraging direct giving through workplace giving and community foundations. 2) Advocating for policies that expand the donor base, like universal charitable deductions for non-itemizers. 3) Promoting volunteering as a gateway to giving. Volunteering is up—75.7 million Americans volunteered in 2023 (AmeriCorps & U.S. Census Bureau). That’s a huge pool of potential donors. And 4) Using DAFs wisely, but not as a replacement for regular, small-dollar giving.

Quick tip: If you’re a nonprofit, don’t just chase DAF grants. Build relationships with individual donors at all levels—they’re the backbone of sustainable funding.

What I’d Actually Do

I’d cap DAF tax benefits at a certain amount, say $1 million per donor, and require a minimum payout of 50% over five years. That would slow the hoarding and push money out faster. But more importantly, I’d shift our sector’s focus from “record totals” to “broad participation.” Let’s celebrate the 36 million people who gave on GivingTuesday (GivingTuesday Data Commons), not just the billions they raised. And let’s remember that 28.3% of Americans volunteered in 2023 (AmeriCorps & U.S. Census Bureau)—that’s a resource we’re not tapping enough. Charity is about people helping people, not about moving money between accounts. Let’s get back to that.

Sources

• Giving USA 2025 - https://givingusa.org/giving-usa-2025-u-s-charitable-giving-grew-to-592-50-billion-in-2024-lifted-by-stock-market-gains/
• DAF Research Collaborative - https://www.dafresearchcollaborative.org/research/annual-daf-report
• NPTrust - https://www.nptrust.org/philanthropic-resources/charitable-giving-statistics/
• Financial Planning - https://www.financial-planning.com/news/42-of-giving-millennials-using-dafs-with-gen-z-ramping-up-expected-usage
• AmeriCorps & U.S. Census Bureau - https://www.census.gov/library/stories/2024/11/civic-engagement-and-volunteerism.html
• GivingTuesday Data Commons - https://www.givingtuesday.org/blog/givingtuesday-2024-record-breaking-results/