Calculating DAF Payout and What We Learn When We Do It Correctly

James Andreoni and Ray Madoff

No 27888, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The tremendous increase in the use of donor-advised funds for charitable donations has led policy-makers to ask if there is sufficient regulation and oversight of DAFs. In the absence of account level reporting, the debate has focused on the average payout rates of DAF sponsoring organizations, which have been reported by the DAF industry to exceed 20%. We show that the industry-preferred method for calculating payout rate overstates the correct payout by more than 50%. We then argue that the flow rate is uninformative unless grounded in the stock of assets held by the DAF sponsor. We suggest a different measure of flow we call the stockpiling rate. Finally, we show that transfers between DAFSs cause DAF grants to be overstated. Reporting transfers separately would allow a more precise estimate of flow.

JEL-codes: H2 H31 H43 H83 (search for similar items in EconPapers)
Date: 2020-10
Note: PE
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Citations: View citations in EconPapers (3)

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