AI Wealth Boom Meets Broken Giving System

The article, written by two advisors to wealthy technologists, begins from an observation: people building today's AI industry will soon become very rich, and many are already thinking about philanthropy. But intention does not easily translate to impact, the authors argue, because the infrastructure around large-scale giving has a structural flaw.

They point to the Giving Pledge of 2010, when some of the world's wealthiest people publicly committed to donate the majority of their fortunes to charity. It was heralded as a turning point, but "more than a decade on, follow-through looks underwhelming." The problem is not laziness or bad faith—it is the system itself.

When someone suddenly acquires wealth, the moment is disorienting. The stakes feel enormous, the philanthropic landscape feels overwhelming, and financial advisors all recommend the same vehicle: a donor-advised fund. A DAF works simply: you open an account, transfer pre-IPO equity before the tax window closes, take the tax deduction, and "punt the decision on where to give until later. Later can mean 12 months, 12 years, or never." The system's incentives quietly favor the last option.

The scale is striking. Over $300 billion of philanthropic capital is currently sitting in American DAF accounts. But the telling number is what happens to it: only around a quarter of DAF assets are paid out in any given year, and a substantial portion of that goes from one DAF to another without helping any beneficiaries. In 2024, the most successful charitable fundraiser in the United States was not a hospital, food bank, or 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" are DAF sponsors. The money is piling in but not moving out.

The reason is economic incentive. DAF providers collect fees tied to assets under management, not assets deployed. Fidelity generated more than $1 billion in revenue from running its charitable arm over the last five years. Donors receive their tax deduction the moment they contribute—the financial transaction is complete, the tax benefit is secured, and the question of where the money actually goes slides quietly to the bottom of the to-do list. There is no legal requirement to ever give it away.

By contrast, private foundations face a 5 percent annual distribution requirement, a rule created precisely to prevent charitable vehicles from becoming indefinite tax shelters. DAFs face no equivalent requirement. Congress created the tax break on the assumption that money would reach charities. That gap between assumption and practice is the article's core complaint.

The authors call for reform on multiple fronts: Congress could impose distribution requirements on DAFs; the nonprofit sector could build better infrastructure to identify high-impact opportunities and execute grants quickly; DAF providers could be redesigned around active grantmaking rather than asset accumulation; and independent evaluators could do rigorous work identifying where money makes the biggest difference. A new generation of philanthropists is about to make consequential decisions about what to do with significant wealth. The question is whether the infrastructure they inherit will gently steer them toward delay, or whether it will be redesigned to deliver on the original bargain: society forgoes tax revenue, and charities receive the funds.