AI is creating a new wave of philanthropists. The system they’re walking into is broken

A new wave of AI-generated wealth is poised to enter philanthropy, but the current giving infrastructure, particularly donor-advised funds (DAFs), is failing to translate intentions into action, according to advisors to tech philanthropists. Over $300 billion sits in American DAF accounts, yet only about a quarter of DAF assets are paid out annually, with no legal obligation to distribute, and in 2024 Fidelity Charitable, a DAF sponsor, was the top U.S. charitable fundraiser, taking in nearly $16 billion.

Sometime in the near future, a significant portion of the people building today's AI industry are expected to become very rich. Many are already thinking about what to do with that wealth. The two of us advise some of the most philanthropically motivated people in tech. These are people who genuinely want, and have the means, to make a real difference. But the current infrastructure around giving large amounts of money away is widening the gap between intention and action. In 2010, some of the wealthiest people in the world signed the Giving Pledge – a public commitment to donate the majority of their fortunes to charitable causes. It was heralded as a turning point for American philanthropy. But more than a decade on, follow-through looks underwhelming. We believe the reason for that runs deeper than any single giving vehicle. The incoming wave of philanthropists is different to the last, but they will meet the same infrastructure and incentives. For many, the moment of liquidity itself can be disorienting. The stakes feel enormous while the philanthropic landscape feels overwhelming. Lawyers, financial advisors, and colleagues all have opinions. Some would-be donors retreat back into work and let the moment pass. Others give to the first credible organisation that shows up with a compelling pitch. And the infrastructure most donors encounter at that moment is not designed to help them do better. The answer most of these newly wealthy philanthropists will arrive at, the answer the financial industry is already prepared to offer, is a donor-advised fund DAF . The mechanics of a DAF are relatively simple: open an account, transfer your pre-IPO equity before the tax window closes, take the deduction, and punt the decision on where to give until later. Later can mean 12 months, 12 years, or never, and the system's incentives quietly favor the last option. Opening a DAF feels like the responsible move and, in many ways, it is. But it also means joining a system that, despite its good intentions, has developed a serious structural problem, one that a new wave of philanthropists could make significantly larger. There is currently over $300 billion https://www.dafresearchcollaborative.org/research/annual-daf-report of philanthropic capital sitting in American DAF accounts. That figure alone is striking, but the more telling number is what's happening to it: only around a quarter of DAF assets https://www.dafresearchcollaborative.org/research/annual-daf-report are paid out in any given year, a substantial portion of which simply goes from one DAF to another without helping any beneficiaries and with no legal obligation to distribute anything at all. In 2024 https://inequality.org/article/top-charities-donor-advised-funds/ , the most successful charitable fundraiser in the United States was not a hospital, a food bank, or an international relief organization. It was Fidelity Charitable, a DAF sponsor that took in nearly $16 billion in contributions. Eleven of America's top twenty fundraising "charities" https://inequality.org/article/top-charities-donor-advised-funds/ are DAF sponsors. The money is piling into DAFs but it is not moving out.