The Latest Industry Numbers on DAFs Are Yet Another Example of Selective Transparency

It’ll be no secret to anyone following philanthropy that grantmakers like to use data to toot their own horns. That’s understandable and mostly harmless when it happens on a funder-by-funder basis. But what about when partial or cherry-picked data is marshaled to characterize the philanthrosphere as a whole? Is it a problem when we find ourselves relying so heavily on industry numbers conjured from philanthropy’s own ranks, with philanthropic funders themselves footing the bill for the research?

Some time ago, I wrote about overly rosy industry numbers as they show up via GivingTuesday (the organization), which regularly touts the magnitude of its “generosity movement” while giving shorter shrift to trends like long-term small-donor decline and growing top heaviness in the sector amid rampant wealth inequality. (To be fair, in 2023, the organization did acknowledge “a decline in participation in line with giving trends from the past year.”)

GivingTuesday, for those unaware, gets much of its organizational budget from the Bill & Melinda Gates Foundation, which has taken an interest in encouraging charitable giving. And so it wasn’t entirely surprising to see the Gates Foundation’s fingerprints all over another one of the latest big examples of industry numbers in action: the 2024 National Study on Donor-Advised Funds, released in February by the DAF Research Collaborative (DAFRC).

On one hand, the report, which was billed as “independent” by DAFRC, does shed some much-needed light on the world of DAFs. Much of our understanding of this shadowy domain is limited to another marquee example of industry numbers — reports from the nation’s largest providers of DAFs, the National Philanthropic Trust’s annual DAF report in particular. As you might expect, these reports highlight the generosity of DAF holders, while DAF critics routinely criticize their methodology as misleading and overly upbeat.

But as Jeffrey J. Cain pointed out in a piquant commentary last month, DAFRC’s report seems every bit a product of the philanthropy-industrial complex as NPT’s annual account. Cain details, for instance, the extent to which the Gates Foundation, again, appears to have thoroughly backed the endeavor (note that GivingTuesday is also a partner of the DAFRC effort). Moreover, far from reflecting U.S. DAFs in their entirety, the report relies on a voluntary sampling of DAF accounts — around 50,000 out of over 2 million in total. In addition, Cain points out, DAFRC’s report omits the most consequential DAF accounts — those over $100 million — in the interest of donor anonymity.

The upshot is that although the report’s conclusions may be valuable in some ways, they cannot be taken as comprehensive of the field as a whole. Nor, as with NPT’s reports, should they be seen as uninterested. NPT’s numbers, coming as they do directly from a DAF sponsor, are clearly industry figures and should be acknowledged as such, regardless of their level of accuracy and/or comprehensiveness. But DAFRC’s effort is also deeply enmeshed with a philanthropic establishment whose cheerleading for DAFs has been continual and near unanimous, despite the serious questions the giving vehicles pose for U.S. philanthropy. Gates funding aside, a glance at DAFRC’s advisory committee reveals ample representation from sector organizations leading the charge to boost DAFs and shoo away criticism.

It’s possible to take an entirely cynical view of the Gates Foundation’s involvement in this, and of the DAFRC project as a whole. Bill Gates and his foundation, in their calls for more charitable giving large and small, have implied that the lack of resources to solve social problems is a consequence of mere insufficient generosity, and that we must “celebrate philanthropy in all its forms” — as if the Gateses’ power and influence has anything at all in common with a small donation to the local food bank. As Cain interprets it, the intent of research like DAFRC’s is “to convince legislators and anyone paying attention that when it comes to philanthropy, the differences between the interests of the Bill & Melinda Gates Foundation and the average American donor are a matter of degree, not kind.”

But even if we take a more forgiving attitude toward the Gates Foundation’s role in projects to reverse small donor decline, all of this still reflects the deep lack of transparency and the rhetorical use of incomplete data bedeviling philanthropy at large — and not just DAFs and a galaxy of Gates-backed research and media initiatives.

Messaging to bolster the interests of “Big Philanthropy” is one thing. But from another angle, I’ve also written about incomplete or foggy data feeding into the idea that pretty much every cause out there is “underfunded” by some measure. While accurate in some cases, underfunding is also a hazy concept, like “generosity” itself, revealing just how murky this sector remains in comparison to other sectors charged with diagnosing and responding to social problems.

Philanthropic pluralism is all well and good, but one of the costs we pay — beyond subsidizing 501(c)(3) giving as taxpayers — is never really getting clear figures on the patchwork quilt that is the U.S. civic sector. That’s doubly the case for DAFs, whose lack of donor disclosure requirements introduces an additional layer of opacity. Until these structural realities shift, we may be stuck relying on industry numbers that end up getting passed along as plain fact by those who don’t know better.

Featured