Helen Flannery is an associate fellow at the Institute for Policy Research (IPS), for which her research and writing focuses on charity reform. Prior to coming to IPS, she worked for nonprofit clients at both the Target Analytics and ROI Solutions software-development firms.
Brian Mittendorf is the H.P. Wolfe Chair in Accounting at The Ohio State University’s Max M. Fisher College of Business. He specializes in nonprofit accounting and teaches courses on financial statements for nonprofit and governmental organizations, among other things. Prior to coming to Fisher College, he was an associate professor at the Yale School of Management.
Flannery and Mittendorf often collaborate on research and co-author articles about nonprofit finance—most recently including the fascinating “Charitable Objectives or Donor Benefits? What Sponsor Language Reveals about Donor-Advised Fund Priorities and Resource Flows,” forthcoming in Nonprofit and Voluntary Sector Quarterly. For the article, acknowledging that donor-advised funds (DAFs) “are not a homogenous monolith, and seeking to understand what distinguishes sponsoring organizations from each other,” on the basis of DAF sponsors’ own specific language and descriptions of their offerings and activities, Flannery and Mittendorf “develop a measure of DAF sponsor priorities and examine if it is predictive of behavior,” as they put it.
Highlighting one interpretation of their findings, Flannery and Mittendorf continue, because DAFs sponsored by “community foundations tend to have missions that are firmly rooted in specific localities, sponsors and donors are unified around shared expectations and priorities.” On the other hand, DAFs with
[n]ational sponsors, which have no locally unifying missions, may instead attract different donors depending on how much they emphasize extrinsic benefits—and this, in turn, may affect both the types of contributions they receive and the speed with which they disburse grants. Consistent with this notion, we find that national sponsors who put a greater emphasis on donor benefits in their website language have greater assets, are more apt to receive donations that are more tax favored, and are more apt to be slow in distributing grants than those national sponsors whose language emphasizes charitable impact.
Flannery and Mittendorf believe their “findings may also help policy makers identify circumstances where DAF sponsors warrant additional scrutiny,” they add in the article. “That is, even if the average sponsor exhibits characteristics that suggest limited intervention, observable and predictable variation across sponsors may justify oversight of or guardrails placed on at least some of them, particularly as it pertains to their payout practices.”
Previous, also-informative articles by the two include last year’s “Reshaping Charity Channels: How Assets Flow into and out of Donor-Advised Funds” and “Are Donor-Advised Funds Facilitating Opaque Giving to Politically Engaged Charities?”
The approachable and good-natured co-authors were kind enough to join me for a recorded conversation earlier this month. The 19-minute, edited video below is the first part of our discussion; the second is here. During the first part, we talk about their research and writing on donor-advised funds (DAFs) in general and why they’re controversial—along with different kinds of DAF sponsors, and their different focuses and emphases, in particular.
A DAF “is a financial account, like a bank account—except instead of being managed by a bank, it’s managed by a charity, which is called a sponsor,” Flannery tells me. Donors “donors put money into the DAF and take a tax deduction right away because they’re giving the money to charity, and then the sponsor gives the donor broad advisory privileges to recommend grants out” from the account.
“They’re controversial for a few reasons, and these are more important now than ever, I will say, because of how fast they’re growing,” she says.
To me, they center around issues of money control and transparency. When it comes to money, donors put money into a DAF and they get to take a tax deduction right away. But DAFs have no payout requirement, which means the money doesn’t actually have to move out to charity. It can just sit there, earning fees for sponsors and earning fees for the investment managers that manage the assets. … So it’s sort of like a mini-private foundation, where the donor retains control.
And “when it comes to transparency, DAFs have next to no disclosure requirements,” Flannery continues. DAF sponsors
don’t have to disclose their major donors, and they only have to disclose their grants in aggregate at the sponsor level. There’s no way for the public to know which accounts are making which grants, and that means that DAFs can make gifts [that] are totally anonymous, which makes them great conduits for dark money contributions.
For their “Charitable Objectives or Donor Benefits?,” Flannery and Mittendorf asked about DAF sponsors, “How do they distinguish themselves? What differentiates Fidelity from Schwab from your local community foundation?” Mittendorf says. “Because they’re all offering donor-advised funds … that might seem like a commodity to a donor. We’re interested in how they distinguish themselves. What makes them different from one another?
“If I’m a donor, how do I distinguish these national sponsors,” he continues, “and why would I choose one over another? How do they pitch themselves to donors? Is it what they can achieve for you in terms of charitable outcomes? Or do they view you as like an investment client? … Is it client service to them?”
Specifically, “We created a score called the Emphasis Measure, which we then apply to all the different sponsors,” according to Flannery. “A high score meant you are very highly focused on extrinsic donor benefits outside of charitable giving, and a low score meant you were very focused on charitable mission, getting charitable grants out the door.”
“DAF sponsors are straddling these two worlds. They are serving their clients who are donors, but they’re also serving mission outcomes at the same time,” according to Mittendorf.
If some of these sponsors really mostly talk and use language about what they can do for the donor, versus those that talk about what they can do to achieve outcomes, do they behave differently from one another? Or probably the better way of asking it is, do they attract different types of donors?
On average, “the national sponsors pay out at much-higher rates than community foundations do,” he later notes. “So if that is your concern, you know, exempting community foundations” from any aggressive reform because they might not be warehousing charitable assets more, “I don’t think that’s fair. The data doesn’t really show that community foundations behave differently in that regard.”
The data also show “a lot more variability, amongst the national sponsors,” Mittendorf adds. “So I think one thing I would constantly say is comparing the average community foundation to the average national sponsor misses out on the variation. … Community foundations’ behavior is much more predictable.
“What we have is data at the sponsor level,” he says, “but what I would really be interested in is data at the donor,” or account-specific, level.
In the conversation’s second part, Flannery and Mittendorf discuss ways to think about any potential legal and regulatory DAF reforms.
This article first appeared in the Giving Review on May 21, 2025.
