The growing popularity of donor-advised funds (DAFs) may have cost charities $300 billion during the five-year period from 2014 to 2018, a report from the Boston College Law School Forum on Philanthropy and the Public Good finds.

Based on data from Giving USA, the National Philanthropic Trust, and 990 tax filings, the report, Impact of the Rise of Commercial Donor-Advised Funds on the Charitable Landscape 1991-2019 (8 pages, PDF), found that in the five years before 1991, the year Fidelity Charitable launched its DAF program, 94.1 percent of all individual giving, on average, was directed to charities, while the remaining 5.9 percent went to private and community foundations. By 2019, the share of giving to DAFs and foundations had grown nearly five-fold, to 28 percent — with 13 percent going into DAFs and 15 percent to foundations. As a result, total giving to charities as a percentage of total individual giving (including grants from private foundations and donor-advised funds as well as direct giving from individuals) ranged between 71 percent (2017) and 74.7 percent (2015). According to the study, if the 94.1 percent share of individual giving had continued to go directly to nonprofits and charities, they would have received an additional $300 billion between 2014 and 2018.

Conducted by James Andreoni, a professor of economics at the University of California, San Diego, and Boston College law professor Ray D. Madoff, the co-founder and director of the Forum on Philanthropy and the Public Good, the study found "no evidence that the proliferation of [DAFs] has resulted in an increase in individual charitable giving, as individual giving has remained largely constant as a percentage of disposable income and is currently at the low end of the range."

"This report is a novel approach in that it looks to actual receipts by charities instead of reported distributions by donor-advised fund sponsors," Madoff told the Chronicle of Philanthropy.