Abstract
Billions of dollars are sitting in Donor Advised Funds, delaying support for charitable organizations seemingly at odds with the intent of U.S. charitable tax policy. With no requirement for annual distribution nor timelines for disbursement, Donor Advised Funds allow individual and institutional donors to postpone directing funds to charitable organizations - despite already claiming tax benefits. As a result, some DAFs distribute less than 5% of assets annually, while many of the institutions managing the DAFs continue collecting fees.
Two complementary policy interventions are recommended: (1) the issuance of a federal regulation requiring annual minimum distributions from all DAFs, and (2) IRS guidance clarifying that DAF sponsors may distribute money by their own authority. The interventions will require administrative costs for the IRS and introduce the possibility that additional requirements could discourage a small group of donors. However, the benefits of an accelerated release of gift money, more effective deployment of charitable resources, and reinforced public trust in the charitable tax deduction will outweigh these costs. The regulation and guidance, when deployed together, ensures both immediate action and long-term sustainability, encouraging consistent philanthropic support while preserving charitable intent.
Publication Date
7-9-2026
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 4.0 License.
Recommended Citation
Nolan-Smith, Oriel (2026) "Unspent Donations in Donor Advised Funds - Policy Recommendation," Hatfield Graduate Journal of Public Affairs: Vol. 10: Iss. 1, Article 7.
Included in
Nonprofit Administration and Management Commons, Public Affairs, Public Policy and Public Administration Commons, Tax Law Commons
