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Expand chart
Data: National Philanthropic Trust; Chart: Axios Visuals

Billions of dollars are sitting in tax-free Donor-Advised Funds (DAFs) rather than going directly to charities, according to data from the National Philanthropic Trust.

What they are: A DAF "allows donors to make a charitable contribution, receive an immediate tax deduction and then recommend grants from the fund over time," the NPT explains.

  • "Donors can contribute to the fund as frequently as they like, and then recommend grants to their favorite charities whenever [it] makes sense for them."

Driving the news: The amount of money in DAFs keeps growing: 13% of all individual, charitable contributions now go into these funds, up from 4% in 2010.

  • It's too early to say, but DAFs could get a boost from President Trump's new tax code, allowing philanthropists to take an up-front tax break long before the money makes it to any specific cause.

Between the lines: Critics of DAFs see them as easy tax breaks for the wealthy with no enforcement mechanisms to ensure that money actually goes to charity.

  • In the short term, these funds may mostly benefit fund managers.
  • As of 2018, there was $121.42 billion sitting in DAFs.

On the other hand, the payout rate from DAFs to charities is more than 20% a year, according to NPT.

  • Last year, "grants from donor-advised funds to charitable organizations reached a new high at $23.42 billion," the group said in its report. "This is an 18.9 percent increase from a revised 2017 total of $19.70 billion."

What to watch: In an economic downturn, the funds waiting and growing in DAFs could provide a steady stream of money to charities that would otherwise suffer in a recession.

Go deeper:

Go deeper

Bipartisan police reform negotiations end without deal

Rep. Karen Bass (D-Calif.) with Sens. Tim Scott (R-S.C.) and Cory Booker (D-N.J.) in the Capitol in May 2021. Photo: Drew Angerer/Getty Images

Bipartisan talks on reforming police tactics and accountability, prompted by George Floyd's murder in May 2020, have ended without a compromise, Sen. Cory Booker (D-N.J.), a key negotiator, said Wednesday.

Why it matters: Lawmakers, led by Rep. Karen Bass (D-Calif.) and Sens. Tim Scott (R-S.C.) and Booker, had been working toward a bipartisan deal for months but they fell apart due to disagreements on qualified immunity and other issues.

Biden speaks with Macron for first time since diplomatic crisis

President Biden and French President Emmanuel Macron have a conversation ahead of the NATO summit in Brussels, on June 14, 2021. Photo: Dursun Aydemir/Anadolu Agency via Getty Images

President Biden on Wednesday spoke with French President Emmanuel Macron for the first time since a diplomatic row erupted over a scrapped submarine order, per the White House.

Driving the news: Macron said that the French ambassador will return to Washington next week and will resume working with senior U.S. officials.

2 hours ago - World

Scoop: U.S. and Israel held secret talks on Iran "plan B"

Bennett and Biden. Photo: Sarahbeth Maney/Pool/Getty Images

The U.S. and Israel held secret talks on Iran last week to discuss a possible “plan B” if nuclear talks are not resumed, two senior Israeli officials tell me.

Why it matters: This is the first time a top-secret U.S.-Israel strategic working group on Iran has convened since the new Israeli government took office in June.