The wealthier one is, the more illiquid and highly appreciated assets one probably owns, enhancing the appeal of these accounts.

“One reason for the extraordinary growth of DAFs is their ability to provide maximum tax benefits for complex assets: property other than publicly traded stock,” said Ray Madoff, a Boston College Law School professor and founder of its Forum on Philanthropy and the Public Good.

DAF have another advantage: Even though donors yield legal control of assets they contribute, their financial advisers may be allowed to direct how the money is invested and earn management fees. The biggest accounts also may be allowed to invest outside a DAF sponsor’s usual menu of options.

DAF Advantages
DAFs have advantages for financial-services companies, too. Some 60 percent of the $21.2 billion in Fidelity Charitable, for example, is in Fidelity funds. Fidelity Investments parent FMR LLC is the DAF’s largest independent contractor and received $46.3 million for the year ended June 30, 2017.

Annual administrative fees for DAF accounts can be 0.6 percent, on top of investment management fees. Norley said Fidelity Charitable’s “complete overall fees” average 0.6 percent.

“Given the potential for philanthropic dollars to grow through investment in a DAF, the work we are doing creates a net positive in funds made available,” she wrote in an email.

Fidelity Charitable’s 2018 giving report noted that investment growth in its DAFs since inception created $6 billion more for giving.

Some have criticized DAFs because the money they accumulate far outstrips funds flowing in, prompting a recent report to label them “warehouses of wealth.” Private foundations must pay out at least 5 percent of assets annually, but DAFs don’t have a legal requirement for minimum payouts, and the big providers cite annual aggregate grantmaking of about 20 percent.

‘Big’ Policy Question
Payouts are “the big public policy question,” said Roger Colinvaux, a professor at Catholic University of America’s Columbus School of Law. “DAFs are set up to treat money like it’s still the donor’s money. It’s like having your own mutual fund at Fidelity: You get statements and watch it grow. You feel like if you spend it, you lose it.”

If the pace of grantmaking doesn’t increase, DAFs risk regulation, said Bryan de Lottinville, founder of Benevity, a corporate giving platform that partners with DAFs. “There’s this big corpus growing to no real benefit of anyone other than the people earning fees for managing it.”