What is known about Donor Advised Funds? A Systematic Literature Review

• In Event: Unveiling Insights through Literature Reviews

Abstract

OVERVIEW
Despite the global prominence and impact of Donor Advised Funds, there exists no systematic analysis of the literature. Therefore, we conducted the first known systematic literature review of DAFs. In this novel research, we present various disciplines and scholars leading DAF scholarship, their primary interests, and the dominant themes. Moreover, we provide suggestions for future research.

BRIEF BACKGROUND
DAFs have transformed philanthropy. In the US alone, DAF’s comprise 9% of annual giving (Giving USA, 2021). In 2021, DAF assets surpassed $234 billion dollars with nearly 1.3 million individual accounts (National Philanthropic Trust, 2022). While comparable institutions such as foundations held 80% more assets than DAFs in 2021, they only allocated $96 billion (7% of combined assets) while DAFs granted $46 billion with a 27% payout rate (National Philanthropic Trust, 2022).

DAFs are not a new(Berman, 2015; Sacks, 2014). They soared in popularity with the emergence of National Sponsors, e.g. Fidelity Charitable. Their swift and massive growth has garnered attention from scholars and governments across the globe (ACE Act, 2022; Tang, 2021). While much scholarship revolves around fiscal (Andreoni, 2018; Childs et al., 2008) and public policy (Arnsberger, 2015; Colinvaux, 2017; Enright, 2022; Hopkins, 2020), there exists academic work that helps define, understand, and catalog DAFs. Scholars consider DAF’s in terms of history (Berman, 2015; Sacks, 2014), metrics (Osili, 2021), utilization (Eddleston, 2021; Paynter, 2019), and granting activity (Heist & Vance-McMullen, 2019; Hobson, 2020; Hurtubise, 2021; Paynter, 2019).

METHODOLOGICAL APPROACH
A systematic literature review is a scientific method that collects published and unpublished articles and data on defined topics, and analyzes key themes present in the literature to summarize the state of the field on a particular topic (Siddaway et al., 2019; Xiao & Watson, 2019). We conducted this systematic review of DAFs following PRISMA guidelines.

We began with the term, Donor Advised Fund, and then utilized sponsoring organizations’ terminology combined with Google trends-related terms. In addition, source librarians were leveraged as were conversations with colleagues who include DAF research within their scholarly purview. In total, 7 distinct terms comprised the final search which generated 1,784 initial articles. The terms include: “donor advised fund” OR “gift fund” OR “charitable account” OR “charitable investment account” OR “charitable investment fund” OR “Giving Fund” OR “covert philanthropy” The next step involved searching the following databases, Web of Science, SCOPUS, and Proquest, to find peer reviewed articles available in English.

FINDINGS & CONTRIBUTIONS
Findings suggest that DAF literature emanates from two primary fields: economics and political science/law (Heist, 2019). Beyond descriptive research, scholarship mainly concerns themes of taxation and legal validity or efficacy. While some scholarship attends to generational variance as well as class differentials, little scholarship attends to critical evaluations (Hussey, 2010; Reich, 2018) or practical guidance for field practitioners (Heist et al., 2022; Heist & Vance-McMullen, 2019).

This review proves vital to policymakers, academics, and practitioners as it provides essential information about the ways in which researchers produce DAF scholarship that translates to the field—or a lack thereof.

References

Andreoni, J. (2018). The Benefits and Costs of Donor-Advised Funds. Tax Policy and the Economy, 32(1), 1–44. https://doi.org/10.1086/697137

Arnsberger, P. (2015). Donor-Advised Funds: An Overview Using IRS Data. Forum on Philanthropy and the Public Good. https://lawdigitalcommons.bc.edu/philanthropy-forum/donoradvised2015/papers/5

Berman, L. C. (2015). Donor Advised Funds in Historical Perspective. LIRA@BC Law. https://lira.bc.edu/work/ns/8f73ede8-14af-451c-9e7e-92d6570e7a0f

Childs, B., Gonas, J., & Thornton, J. (2008). The Economics of Donor Advised Funds. Journal of Financial Planning.

Colinvaux, R. (2017). Donor Advised Funds: Charitable Spending Vehicles for 21st Century Philanthropy. Washington Law Review, 92, 39.

Enright, K. (2022, January 18). Donor Advised Funds Are Essential for Democratizing Philanthropy. The Chronicle of Philanthropy.

Heist, H. D. (2019). Understanding Donor-Advised Funds: The Behavioral Economics, Macroeconomics, And Public Policies Relating To An Emerging Trend In Philanthropy. Publicly Accessible Penn Dissertations. https://repository.upenn.edu/edissertations/3346

Heist, H. D., Cummings, B. F., Farwell, M. M.,
Cnaan, R., & Andrews, E. (2022). Tubs, tanks, and towers: Donor strategies for donor-advised funds giving. Nonprofit Management and Leadership, n/a(n/a). https://doi.org/10.1002/nml.21544

Heist, H. D., & Vance-McMullen, D. (2019). Understanding Donor-Advised Funds: How Grants Flow During Recessions. Nonprofit and Voluntary Sector Quarterly, 48(5), 1066–1093. https://doi.org/10.1177/0899764019856118

Hopkins, B. R. (2020). Donor-Advised Funds: Law and Policy. Dorrance Publishing.

Hussey, M. J. (2010). Avoiding Misuse of Donor Advised Funds. Cleveland State Law Review, 58, 59.

National Philanthropic Trust. (2022). The 2022 DAF Report. https://www.nptrust.org/reports/daf-report/

ACE Act, HR 6595, Congress, 117 (2022). http://www.congress.gov/

Reich, R. (2018). Just Giving: Why Philanthropy Is Failing Democracy and How It Can Do Better. Princeton University Press.

Sacks, E. (2014). The Growing Importance of Community Foundations [Working Paper]. https://scholarworks.iupui.edu/handle/1805/6364

Siddaway, A. P., Wood, A. M., & Hedges, L. V. (2019). How to Do a Systematic Review: A Best Practice Guide for Conducting and Reporting Narrative Reviews, Meta-Analyses, and Meta-Syntheses. Annual Review of Psychology, 70(1), 747–770. https://doi.org/10.1146/annurev-psych-010418-102803

Tang, H. W. (2021). Donor-advised funds can make a meaningful impact in Asia. Business Times (Singapore), 21. https://www.businesstimes.com.sg/opinion/donor-advised-funds-can-make-a-meaningful-impact-in-asia#:~:text=Such%20funds%20give%20donors%20more,tipped%20off%20about%20underfunded%20causes.&text=In%20Asia%2C%20DAFs%20are%20relatively,and%20Japan%20setting%20t

Xiao, Y., & Watson, M. (2019). Guidance on Conducting a Systematic Literature Review. Journal of Planning Education and Research, 39(1), 93–112. https://doi.org/10.1177/0739456X17723971

Authors

• Ronnie Plasters

• Sara Konrath, Indiana University

• Tony Castardale, IUPUI