The rise of donor-advised funds (DAFs)—funds held by a community foundation or other public charity where the donor directs distributions—has allowed many donors to practice philanthropy without either creating a new institution or relinquishing control over their funds to the unrestricted common endowment of a community foundation. The number of DAFs has grown exponentially since the Fidelity Charitable Gift Fund and other financial services firms entered the market in the early 1990s; estimates by the Chronicle of Philanthropy in mid-2004 suggest that at least $11.3 billion in charitable giving now flows annually through donor-advised funds. While community foundations have long used DAFs, they have traditionally emphasized giving to an unrestricted common endowment guided by a governing body of trustees from the local area, rather than by donors. The growth of DAFs has changed the balance of control at many community foundations, and competition from commercial DAFs has often pushed community funders to improve their efficiency and customer service.
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