DAFs in Spotlight Again for Ignoring Donor Wishes
Many in philanthropy worry that recent moves by three of the biggest names in donor-advised funds — Fidelity Charitable, DAFGiving360, and Vanguard Charitable — may change the way donors interact with DAFs.
The three DAF sponsors are refusing to honor donor requests to give money to the Southern Poverty Law Center. According to their most recent 990 filings, the three DAF sponsors collectively hold nearly $130 billion in assets, and they said they paused donations because the center was indicted for fraud by the Trump administration (see box). But several observers say those charges may lack evidence and are politically motivated.
DAF account holders set money aside for charitable giving, get an immediate tax break, and then advise the sponsoring organization when and where to send the donation. The ban on sending donations to the law center means donor requests to send money to the charity will no longer be honored. “We want these institutions to reverse course and allow donors to make grants to the Southern Poverty Law Center and respect donor intent,” says Pamela Shifman, president of the Democracy Alliance, a network of wealthy progressive donors, foundations, and labor unions.
The Democracy Alliance wrote a letter, signed by more than 75 individuals and organizations, encouraging the three DAF sponsors to change their policies. If they refuse, the alliance says it will encourage donors to move their money to other DAFs.
While the long-term impact of this restriction remains to be seen, experts expect donors who are miffed by the move to become a lot more discerning about which sponsoring organization they choose. Some donors may stop using DAFs for charitable giving altogether.
When DAFs Say No to Donors
Organizations that sponsor DAFs are legally structured as 501(c)(3) charities, and when a donor makes a contribution to a DAF, they give up control over the money, says Ray Madoff, a professor at Boston College Law School. However, donors take on an advisory role and can suggest where the money goes.
What the DAF Sponsors Are Saying
The Chronicle asked the three DAF sponsors why they are denying grants to the Southern Poverty Law Center and whether they allow unhappy donors to move assets to other sponsors. Here are their written responses.
Vanguard Charitable. “If we become aware an organization has been charged with a crime by state or federal authorities, we pause grant making while the matter is pending.” The organization said that is why it halted grants to the Southern Poverty Law Center. However, donors can grant to any charity in good standing, “including other DAF sponsors,” so there would be no restrictions on donors moving their DAF accounts.
Dafgiving360. “Per DAFgiving360 policies, granting to Southern Poverty Law Center has currently been suspended. If a governing body of a charity declares an investigation into a charity it oversees, DAFgiving360 may suspend grants to the organization. DAFgiving360 applies its policies consistently across all charitable organizations.” DAFgiving360 said it allows transfers to all nonprofits, including other DAF sponsors, that are “deemed eligible by the IRS and state regulators.”
Fidelity Charitable. “Fidelity Charitable is a cause-neutral charity that … supports grant making to a wide range of IRS-approved charitable organizations as recommended by its donors. Fidelity Charitable does not limit grant making to specific charitable activities or fields of interest, to specific geographical or demographic criteria, or to specific organizations based on political, religious, or philosophical grounds.” Fidelity also said its due diligence policy states that grants may be declined if “the organization is being investigated for alleged illegal activities or noncharitable activities, such as terrorism, money laundering, hate crimes, or fraud.”
While DAF sponsors don’t legally have to follow a donor’s wishes, in most cases, they do. As noted previously in the Chronicle, some restrictions do apply. Sponsors will refuse to direct money to an organization if the donor stands to benefit from a contribution, or if the designated grantee is not a nonprofit, for example.
According to The National Survey of Donor Advised Fund Managers, a 2025 report, 78 percent of DAF sponsors have policies in place that decline “grants to grantees that have been charged with illegal activity.” Similarly, 75 percent have policies to decline “grants to ‘hate groups’ as defined by a third party or internal list.”
Madoff notes donors need clarity on some DAF sponsors’ policies. When the Southern Poverty Law Center has complained in the past that DAF sponsors including Fidelity and Vanguard funded hate groups, sponsors defended themselves by saying they give to nonprofits in good standing with the IRS. Yet the SPLC is in good standing with the IRS and the sponsors are choosing not to fund it.
“I don’t care which rule they adopt,” Madoff says. “What is concerning to me is the way that they don’t seem to have applied their rules in a uniform, principled manner.” It’s important for DAFs to have clear rules explaining how they will operate, so donors can understand and make informed choices, she adds.
While Fidelity, Vanguard, and DAFGiving360 are getting a lot of attention, there are other smaller DAF providers who may have made the same decision, says Mitch Stein, head of strategy at Chariot, a company that allows nonprofits to accept DAF gifts via its website.
“You’re going to see DAF sponsors on either side of something like this,” Stein says. “It’s more of a reminder about the questions that need to be asked and the diligence to be done prior to using any specific provider.”
Donors Worry Other Orgs Will Be Targeted
Beyond the concerns surrounding giving to this specific charity, Aaron Dorfman, CEO of the National Committee for Responsive Philanthropy, says donors worry that large DAF sponsors could negatively affect giving to other charities with which the administration has ideological differences. He stresses that the Southern Poverty Law Center hasn’t been convicted of any wrongdoing.
“This is a dangerous precedent,” Dorfman says. “If this administration realizes they can cut off the financing of nonprofits they happen to disagree with just by accusing them of a crime, you can bet they’re going to accuse more groups of crimes. They don’t even have to win. They don’t have to prove anything if allegations alone are enough to cease the funding to a nonprofit.”
Mike Wang, a partner at the philanthropic advisory firm Building Impact Partners, predicts that DAFs are going to be increasingly subject to complicated politics. “Donors run the very real risk that political shifts or institutional policy changes within the context of the DAF sponsors are going to start to dictate where the donor money can go and not go.”
Donors May Move Their Accounts
As more donors hear about the refusal, they’re taking note and figuring out where they want to house their DAF funds, says Shifman. “Donors want to partner with institutions that reflect their values,” she says. “The donors of the Democracy Alliance have a lot of options.”
While the alliance wants the three DAFs to reverse course, it is also telling donors to consider moving their money to another DAF if the policies stay in place. Madoff, the law professor, notes that there’s been a lot of talk online of people moving their money to other DAF sponsors.
People who are unhappy with their DAF sponsor are “going to vote with their feet,” says Madoff, who is also co-founder of the Boston College Law School Forum on Philanthropy and the Public Good.
Madoff adds that as long as DAF sponsors continue to allow donors to move assets — rather than exerting their legal control over the money and refusing to move it, as a Colorado DAF is alleged to have done — donors can get money to charities as they wish. “If people couldn’t just pick up their money and move it to another DAF sponsor, that would be a game changer,” she says.
Already, other DAF sponsors are courting donors; several community foundations and other smaller DAF sponsors like Daffy are telling donors they welcome their fund transfers.
Donors are likely to spend more time examining the fine print on the policies of DAF sponsors, predicts Stein of Chariot. Wang, of Building Impact Partners, thinks donors will vet DAF sponsors more carefully and give more thought to whether they want to create a DAF at all. Now, Wang notes, many people simply set one up because a financial advisor recommended doing so for tax purposes.
Unfortunately, too often no one asks the donor why they’re giving and what they want to accomplish.
DAFs are great, Wang says, but they’re not right for every philanthropic goal. The situation with the big DAF sponsors, he says, “really exposes some of the underlying risks with donor-advised funds.”