Pressing Peers
Some rich Americans are also pressing their peers.

David and Jennifer Risher of San Francisco launched the “#HalfMyDAF Challenge,” which provides $1.4 million in matching grants to donors who give away half the dollars in their DAFs by Sept. 30.

A former executive at Microsoft Corp. and Amazon.com Inc., David Risher now heads Worldreader, a nonprofit that supports digital reading programs for children in developing countries. He said he’s been frustrated by the money “just kind of parked” in DAFs.

Annual giving to DAFs surged almost 50% from 2016 through 2018, bringing balances to $121 billion, according to the latest figures from the National Philanthropic Trust. The number of individual DAF accounts grew even faster in that span, more than doubling to 728,563.

Ultimately, DAF dollars are supposed to reach charitable organizations, but some have expressed concern -- often privately, for fear of angering donors -- about the lack of rules. Giving to DAFs made up 12.7% of all individual donations in 2018, up from 9% in 2016. But that hasn’t grown the size of the pie: Total individual giving, adjusted for inflation, was flat from 2016 through 2018.

The billions of dollars in DAFs are a flashpoint especially in the San Francisco Bay Area, where struggling nonprofits toil just miles from some of the world’s richest people. The 10,000-member California Association of Nonprofits has lobbied the state legislature for more regulation on DAFs.

Bay Area
Billionaire Kat Taylor said she and her husband, erstwhile presidential candidate Tom Steyer, spend down their DAFs quickly. But she suspects many of her rich peers in the Bay Area don’t even know they hold DAFs, which often are set up by financial advisers. “In some settings, it’s a tax-management tool as much as it is a charitable tool,” she said.

The Silicon Valley Community Foundation, a prime destination for tech philanthropy with $7.6 billion in DAFs at the end of 2018, said grants from its DAFs rose 51% in April from a year earlier.

Defenders of DAFs, including firms that earn fees managing charitable assets, said it’s rare for donors to let money just sit. Sometimes clients with small accounts forget about them, but Fidelity, Schwab, Vanguard and others said they contact clients and require at least something be given every few years.

It can take time for newly minted multimillionaires or billionaires to come up with a philanthropic strategy, said Schwab Charitable President Kim Laughton.