Social Change through Financial Innovation: Evidence from Donor-advised Funds

I draw on new data and theory to examine how donor-advised funds (DAFs), a fast-growing philanthropic option, relate to social progress. DAFs are distinguished by flexibility – transforming complex assets, separating the timing of tax breaks from giving decisions, and offering impact investment opportunities. Data on 4,286 unique DAF sponsors reveals that the recent growth is driven by DAFs using modern financial technologies. Estimates indicate these innovative DAFs support social progress by targeting a more inclusive donor base and channeling generosity to charities serving areas with high inequality, in times of greatest financial need, and with more transparent and efficient operations.