Donor Advised Funds in Historical Perspective

Abstract

This article argues that the emergence of a specific financial structure called the donor advised fund (DAF) developed in tandem with postwar efforts to extend the private sector’s reach into public welfare through new forms of charitable giving and voluntarism. In charting the gestation, birth, and expansion of DAFs from the late nineteenth century to our present day, it contends that the longstanding tension in American life between state-based regulation and individual freedoms has stood at the heart of debates about charitable tax law. Far from simply reflecting reigning historical forces, DAFs came to shape ideologies about public and private good in American life. A sea change in charitable giving occurred after the passage of the 1969 Tax Reform Act. In response, tax attorneys and charitable organizations sought to extend the designation of “public charity” to protect individuals’ charitable assets from being treated as “private foundations,” which were subject to new tax burdens and reporting obligations. By looking in particular at American-Jewish philanthropic activism during this period, the article concludes that DAFs emerged as one, among a handful, of new financial vehicles that empowered private wealth and decision-making with the privileges of putatively public charitable entities.