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December 11, 2014

Opinion: Donor-Advised Funds a 'Wall Street Takeover' of Giving

Donor-advised funds, which are exploding in popularity as a giving vehicle, are "a bad deal for society" and a symbol of how philanthropy has become "financialized," according to a ProPublica column.

Writer Jesse Eisinger notes that contributions to the funds, which are charitable arms of huge money-management companies like Fidelity and Charles Schwab, rose 24 percent to $17-billion in 2013. The funds manage some $54-billion in total assets, of which less than $10-billion went out in grants to charities last year, he says.

While donors get an immediate tax break on their contributions, there is no deadline for disbursing the money, meaning it can pile up for years, Mr. Eisinger writes—shifting the benefit from charities to the funds themselves, which draw fees based on the size of the assets they accumulate.

Read recent Chronicle of Philanthropy columns criticizing and defending donor-advised funds as a philanthropic tool.